Kitco Market Nuggets

Market Nuggets: Indian Gold Import Data Disappoints Commerzbank

03 January 2012, 9:09 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Indian gold import data is much lower than expected, according to the Bombay Bullion Association, says Commerzbank, and this could have implications for physical prices. Commerzbank notes that the association says India imported “only” 125 tons of gold in the fourth quarter of 2011, with buyers hampered by a combination of high prices and high domestic interest rates. Comparatively, the bank says, the World Gold Council was still anticipating in its November data that India would import 281 tons. “The gold price thus lacked an important crutch in the fourth quarter, as a result of which there was even an 8.4% year-on-year drop in Indian gold imports in 2011 as a whole to around 878 tons. This also put paid to expectations that India might for the very first time import more than 1,000 tons of gold within one year,” the bank says. The situation is unlikely to change this quarter, Bombay Bullion Association says. The high prices and high interest rates limits liquidity, and the association forecasts that imports in the first quarter of 2012 could be halved year-on-year. India had imported 286 tons of gold in the first quarter of 2011. “Thus for the time being the gold price will not find any support from this side,” Commerzbank says. The bank adds although the Istanbul Gold Exchange notes Turkey’s imports 80 tons of gold in 2011 were nearly twice as much as in 2010 “this can hardly compensate for the disappointing data from India.”

By Debbie Carlson of Kitco News; dcarlson@kitco.com

Market Nuggets: Casey Research: Fundamental Case For Gold Remains 'Rock Solid'

03 January 2012, 9:02 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Casey Research says the fundamental case for gold remains “rock solid.” Small investors and monetary authorities purchased gold in 2011 due to economic, financial, monetary, and political concerns. “Quite frankly, we see none of these factors changing anytime soon,” Casey says. Further, many countries are continuing to debase their currencies, Casey says. “While U.S. Treasuries may be a good temporary parking spot for cash, don't kid yourself about what's behind it all: nothing,” Casey says. “The dollar is a fiat currency, no more. A true safe haven is something that cannot be debased, devalued, or destroyed by any government.”

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets: Casey Research: Gold Price Will Continue To Be Volatile

03 January 2012, 9:01 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Analysts with Casey Research look for gold to remain volatile in the months ahead, suggesting pullbacks present buying opportunities. Casey notes the average annual 2011 gold price of $1,571.50 an ounce was 28% higher than the prior year's average. Meanwhile, the average retreat in gold since 2001 (of those greater than 5%) is 12.5%. “Declines of this degree are normal,” Casey says. “They will happen again. Thus, expected price behavior leads us to get excited when gold and related stocks go on sale, not depressed about the dips.”

By Allen Sykora of Kitco News; asykora@kitco.com

Market Nuggets: Gold Buyers Return To Futures Market, But Gold Remains Vulnerable To Profit-Taking RBC

03 January 2012, 8:57 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Buyers are returning to the gold futures market as the euro rises and the dollar falls, says George Gero, vice president, precious metals strategist, global futures, RBC Capital Markets. “Far Eastern and Western European buyers (are) replacing previously sold futures for year-end reasons. We still look for close over $1,615 (an ounce) and improving open interest for lasting changes in the asset allocations. The sharp up move is vulnerable to profit taking if we do not see follow through buyers,” Gero says. At 8:53 a.m. EDT, February gold futures are trading around $1,591 an ounce.

By Debbie Carlson of Kitco News; dcarlson@kitco.com

Market Nuggets: U.S. Dollar Share Of Foreign Reserves Rises In Q3 BBH

03 January 2012, 8:22 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - In the third quarter of 2011 capital flow data showed that the dollar share of total allocated reserves rose, says Brown Brothers Harriman, increasing to 61.7% from 60.3% in the second quarter2011. The euro’s share fell to 25.7%from 26.7% in the second quarter, the lowest euro share since the 25.5%posted in the third quarter of 2008, they note.  The reason for the rise in dollar reserves was the valuation effect, along with the Japanese intervention in August. The dollar was stronger across the board versus the majors in the third quarter, outside of the yen, gaining almost 8% versus the euro. The big move by the dollar is unlikely to be repeated when fourth quarter data is released, BBH says.  The data shows how strongly the dollar’s share of global reserves has held over the past few years. “Overall, we have yet to see the structural decline in the dollar’s reserve status that has been pronounced so many times by media and analysts.... If anything, the current euro zone crisis has served as a reminder that there has not yet been established any currency that could knock the dollar off of its perch as the world’s reserve currency.  Not to say that it is won’t happen, but unlikely at this juncture,” they say.

By Debbie Carlson of Kitco News; dcarlson@kitco.com

Market Nuggets: Gold Rises As Asian, European Equity Markets Rise -R.J. O'Brien

03 January 2012, 8:14 a.m.
By Kitco News
http://www.kitco.com/

(Kitco News) - Asian and European equity markets are up on the first day of trading in 2012, supported by improved manufacturing data out of China. That’s weakened the dollar and in turn has lifted commodities, including gold, says Janet Mirasola, managing director, R.J. O'Brien. “The ‘risk off’ that was seen may have been a year end operation and could give rise to investors taking a fresh look at gold for the New Year,” she says.  Mirasola also notes that the various commodity indexes are rebalancing the first two weeks of the New Year, so volatility will remain high until that is complete.  “Continue to watch headline and breaking news for help with short term direction bearing in mind that the New Year nay bring new investment but assets should be chosen carefully for their fundamental strengths rather than just pure fashionable appeal,” she says.

By Debbie Carlson of Kitco News; dcarlson@kitco.com