Gold prices rose a bit further on Tuesday, despite a mild recovery in the US dollar (to 80.19 on the index), as well as despite a small loss in crude oil values to $59.47 per barrel. Black gold basically fell to a two-month low, as demand worries, exiting commodity speculators, and ample supplies put a damper on not only further progress to the upside, but maintenance of the above-$60 level.
If we are to look for a reason for gold’s better performance today, it might have been rising US retail sales figures and the related brighter outlook on the economy. Better outlook, equals higher inflation – some argue. Metals traders still see problems for bullion at higher ($930s) levels and are anticipating an eventual break to under $900 per ounce on slack investment demand.
Speaking of slack demand (of any kind), the latest in gold offtake statistics from India is all but encouraging. Reuters reports that: “India imported 11.6 tonnes of gold in June, 52 percent down from 24 tonnes a year ago, the head of Bombay Bullion Association (BBA) said on Tuesday.
“Until prices fall, imports will not rise,” said Suresh Hundia, president of the BBA. India saw its highest prices ever on February 20 when gold reached 16,040 rupees. For January to June, India’s gold imports were at 62.4 tonnes, down 55 percent from 139 tonnes imported in the first six months of 2008, data from the BBA shows.” How much can we count to be imported by the country as we go further into the year, now that import duties have doubled and the monsoons are looking disappointing, who knows…
New York spot trading rolled on into the afternoon hours with a $4.20 gain for gold, which was quoted at $925.00 per ounce on the bid side. Silver posted a slim 6 cent gain at last check, and was quoted at $12.89 per ounce, while platinum recovered a bit more substantially. The noble metal rose $13 to $1126.00 per ounce. Palladium gained $7 on the day, to finish at $241.00 per ounce. The Obama administration’s lead car czar, Steven Rattner will quit his short-lived (five month) job in the near future. Less need to ‘interact’ on a daily basis with the automakers, is the official line. One of the quicker resurrections from Ch. 11, this industry has been. Now, if we could just see some tangible results.
Tuesday’s early market action brought pressure on the dollar-yen duo following Monday’s favourable nod by investors towards the same. Expectations of improving US corporate earnings, gains in crude oil, and global stocks, all buoyed risk appetite. With it, came corresponding declines in the two currencies and further gains in precious metals prices.
Sunny as this morning’s mood may have shown to be, not all is seen as rosy, everywhere, just yet. German investor confidence unexpectedly fell overnight, signaling apprehensions about a delay in the economic recovery. US Treasury chief Tim Geithner spoke out as well, and expressed concerns that there will be localized setbacks during this rebound period – some of them looking like full reversals perhaps.
Mr. Geithner did not shy away from mentioning that which has been the focus of much hand-wringing and speculation, of late. Marketwatch reports on the increase in dollar-supportive indirect jawboning as follows: “Treasury Secretary Timothy Geithner said that a strong dollar remained U.S. policy. “I deeply believe that,” Geithner said. “Our commitment is to the world and, of course, the American people that we are going to make sure we put in place the policies that can sustain confidence in this economy and this financial system,” Geithner said.
The Treasury Secretary said he was not worried about talk of a new global reserve currency. He noted that global demand remains strong for Treasurys. Geithner made the comments in an interview with CNN that is scheduled to be aired on Sunday. He also said the Obama administration recognizes that it has a unique role to play in fostering a global economic recovery.
“Given the dollar’s role in the international financial system and the significant impact of the U.S. economy on global economic conditions, we fully recognize that the United States has a special responsibility to play,” Geithner said in written remarks prepared for delivery in Jeddah, Saudi Arabia, according to news reports.”
Geithner said he sees several indications of stabilization and improvement in the U.S., along with “initial signs” of global progress. Government intervention across the world “substantially reduced the risk of much deeper and more prolonged global recession,” he said in Jeddah.
Finally, a rather surreal story from Spain, one that reads like it ought to have been published on the first day of the fourth month of the year. No, it is not the one about Generalissimo Francisco Franco being still dead. We do learn however, that: “cash-strapped Spain has ordered its navy to look for huge gold reserves that were lost at sea in the 16th century. Gold bullion and silver treasure worth an estimated £85 billion – the size of the nation’s current budget shortfall – lies on the sea bed off the coast of southern Spain.
The Inca and Aztec loot is believed to be in heavily laden vessels which hit the bottom of the sea in bad weather as they returned to Cadiz from South America. Naval mine sweepers are to begin radar and sonar surveys to try to locate the wrecks.”
Wait a minute, this is Spain – the same Spain that has over 400 tonnes of gold in reserves and is among the top 15 in central bank holdings of gold? Perhaps, Senores y Senoritas, you might consider gifting any such gold found at the bottom of the sea, back to Peru and/or Mexico- which are plodding along the near-bottom of the gold holder’s list – in 48th and 79th place – with less than a tenth or one hundredth respectively, of Spain’s holdings. Rightful owners, and all… Jon Nadler, Kitco.com