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Market Nuggets: APMA’s Nichols Sees Gold Rising In Years Ahead Despite Friday Sell-Off

Friday April 12, 2013 3:56 PM

Gold is likely to move higher in the years ahead, says Jeffrey Nichols, managing director of American Precious Metals Advisors and senior economic adviser to Rosland Capital. “Gold prices were driven insanely lower today -- not by market fundamentals or the latest readings on the U.S. and global economy -- but by technical and computer-driven program trading mainly in futures, forward, and options markets,” he says. “If anything, this morning's (soft) U.S. economic indicators for retail sales, consumer sentiment, and well-behaved producer prices should have had a positive effect on gold prices.” He looks for some bounce-back in the days ahead, although “short term the market remains vulnerable to more insanity.” However, he says, “the stars remain favorable” to gold. “Prospective U.S. monetary policy is not the only bright star for gold,” he says, citing economic problems in Europe and worries among some about a possible eurozone breakup that should prompt safe-haven demand. “Even if the American and European economic problems suddenly disappeared, gold prices would still rise higher on the back of emerging-economy central bank demand and private-sector buying in China,” he adds.

By Allen Sykora of Kitco News asykora@kitco.com


Market Nuggets: Sharps Pixley: Gold ‘On The Ropes’ But Not ‘Sunk’ Yet

Friday April 12, 2013 12:06 PM

Gold is “on the ropes” but isn’t completely “sunk” yet, says Ross Norman, CEO of Sharps Pixley. Prices have tumbled sharply as key chart levels collapsed and investors are absent, he says. “Shorting gold will remain a popular sport while there is money in it and there has been a noticeable absence of bounce in the price after each sell-off, prompting repeat attacks to the short side,” he says. “Next support levels seen at $1,470, then $1,340.” Still, he says, gold has attractive fundamentals, with the price floor from mining costs rising sharply. “Meanwhile the total U.S. national debt rises in 2013 from $16.8 (trillion) to $17.8 trillion - before number blindness creeps in, a translation is perhaps in order - that is equivalent to more than 330,000 tons of gold, or over twice all of the gold ever produced in history or total gold mine production for the next 120 years - fat chance that is going to be paid down through the fruits of economic labor,” he says. “Gold will remain on the ropes until it engenders higher levels of investment demand -- for that it will require more sales channels, more product innovation and more education. It is a tiny lifeboat in a sea of economic trouble -- this boat ain't sunk yet!”

By Allen Sykora of Kitco News asykora@kitco.com


Market Nuggets: Gold, Silver 'Bounces Likely To Be Sold' – TD Securities

Friday April 12, 2013 7:51 AM

Gold and silver prices are testing support levels in early North American dealings, notes TD Securities. Gold briefly broke through support at $1,545 an ounce, but so far last week's low of $1,539.40 is holding. The next support level is $1,525, they note. Silver's support levels between $27.10-27.30 an ounce were briefly tested, they say, with the next level of support coming in at $26.80. "For now it feels as if bounces will be sold into," they say. At 7:47 a.m. EDT, Comex June gold is down $19.50 at $1,545.40 and May silver is down 44.7 cents to $27.25.

By Debbie Carlson of Kitco News dcarlson@kitco.com


Market Nuggets: Gold Headed For Third Straight Weekly Fall – MKS Capital

Friday April 12, 2013 7:50 AM

The gold market is likely to score its third consecutive weekly decline Friday, says Alex Thorndike, senior trader, precious metals and foreign exchange, MKS Capital, "as ETFs continue to liquidate and the market is preparing for life without quantitative easing." He says the largest physically backed exchange-traded fund, the SPDR Gold Trust, fell to 1,181.42 metric tons on Thursday, with net holds down 12.50% in 2013. "The increasing confidence in the U.S. market, being reflected by the record highs seen in the equity markets, seems to be dampening investors' confidence in the yellow metal," he says. Gold is testing the bottom of the range, which comes in at $1,539.40 an ounce, last week's low, but Thorndike says that may hold. "Physical traders on the bid, the RSI is in oversold territory … the ongoing tensions in Korea, should allow gold, for the time being, to find its feet and support towards the lower end of its recent range," he says. At 7:35 a.m. EDT, June Comex gold is at $1,544.70, down $20.20

By Debbie Carlson of Kitco News dcarlson@kitco.com


Market Nuggets: Commerzbank: Gold Deliveries Suggest 'Preference For Security'

Friday April 12, 2013 7:47 AM

Commerzbank notes the outflows from the world's largest gold ETF, the SPDR Gold Trust, pulled its holdings to their lowest level since May 2010. "Some of the outflows are likely to have been due to physical deliveries rather than solely to shares being sold. This is suggested by the fact that we have also seen a significant reduction in COMEX stocks recently, meaning that gold has been physically delivered on the futures market too. This would point to investors displaying an increased preference for security," they say.

By Debbie Carlson of Kitco News dcarlson@kitco.com


Market Nuggets: Chinese Car Sales Rose 13% In March, Bodes Well For PGMs - Commerzbank

Friday April 12, 2013 7:45 AM

The China Association of Automobile Manufacturers said 1.59 million cars were sold in China in March, up 13% on the year-on-year figure, says Commerzbank, which adds that was the second-highest monthly figure ever following the record level achieved in January. The rise shows car sales recovered from weakness in February, a result of the New Year festivities. "That said, Chinese dealers also offered considerable discounts in a bid to boost car sales because of the high stock levels. The discounts may have been reduced again as the new quarter has got underway. Nonetheless, the trend towards robust car sales in China is likely to continue during the course of the year, which should lend support to platinum and, above all, to palladium," they say.

By Debbie Carlson of Kitco News dcarlson@kitco.com


Market Nuggets: HSBC: PGM Supply Issues Persist In South Africa Despite Year-On-Year Output Rise

Friday April 12, 2013 7:40 AM

HSBC does not view a big year-on-year jump in South African output of platinum group metals to be a major bearish influence since the comparison was helped by low output a year ago due to strikes, while supply issues remain. PGM output in February was up 66% from the same month of 2012. "South Africa is the world's largest platinum producer, and while there has been no major strike action this year so far, relations between labor unions and management remain tense," HSBC says. "Anglo Platinum, the world's main producer, is in extended talks with the government about restructuring plans that could see it cut as many as 14,000 jobs and mothball two mines. Based on soft year-on-year comparisons, we do not view the increase in platinum production as bearish." Further, HSBC points out, metals producers in the country face uncertain power supplies, critical for PGM mining that tends to be far below the ground. The bank cites a late-March report from the Energy Intensive User Group of Southern Africa, an association of large-energy consumers including miners, saying that it sees significant risks of power shortages this year since the electrical system is in distress.

By Allen Sykora of Kitco News asykora@kitco.com


Market Nuggets: Barclays: ETP Outflow Greater Risk To Gold Prices Than Potential Cyprus Sales

Friday April 12, 2013 7:38 AM

Whereas reports of possible Cypriot central-bank gold sales spooked the gold market this week, Barclays Capital says the greater risk to gold would be if outflows from exchange-traded products continue. Mid-week news reports suggested Cyprus might sell some of its gold to help fund part of its bailout, although a central-bank spokesperson later said this would need to be approved by the board of the central bank. The sales would have amounted to around 10.4 metric tons. The bigger worry was whether other European central banks would be asked to follow suit to meet financing needs, Barclays says. "Central bank buying helped to supplement the slowdown in jewelry demand last year, and the sale of 10 tons itself can be absorbed by the gold market, particularly given the strength of China's demand in recent weeks," Barclays says. "ETP outflows on a daily basis have been greater, with net redemptions of 17.4 tons (Wednesday) alone; in our view, continued outflows from the ETPs bear a greater downside risk for gold." As of midweek, outflows had reached 202 tons for the year to date, a sharp contrast to the inflows of 279 tons for 2012, the bank adds.

By Allen Sykora of Kitco News asykora@kitco.com


Market Nuggets: Barclays Looks For 2013 Net Gold Buying From Central Banks Of 300 Metric Tons

Friday April 12, 2013 7:37 AM

Barclays Capital says it looks for the world’s central banks to remain net buyers of gold this year. The market got a scare this week from news reports that Cyprus might sell some gold to deal with its financial problems and that this could spill over to other debt-plagued nations. Barclays points out that central banks have been “firmly on the demand side” so far this year, with net buying of 29.7 metric tons through February. “We expect net central banks buying to reach 300 tons in 2013,” Barclays says. “Furthermore, central-bank independence presents a hurdle and has been tested in the past. Italy’s parliament approved a plan to allow the government to consider using the Bank of Italy’s gold reserves to reduce the country’s debt levels, but then the ECB (European Central Bank) announced that any plans would require its approval.”

By Allen Sykora of Kitco News asykora@kitco.com

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