New York 10/04/2012 - Gold ended above $1,660 an ounce Tuesday, as nervous investors coveted safety amid a 200 point loss on the Dow Jones industrial average.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange settled up $16.80, or one percent, at $1,660.70 an ounce.
“Fear has re-established its stranglehold on the markets. Equities and risk assets are getting crushed, while money makes it way into gold and 10-year [US Treasury] notes, which are now back below two percent,” a US-based gold trader said.
In Europe, Germany's DAX and France's CAC-40 closed down 2.49 percent and 3.08 percent respectively. Meanwhile, Spanish 10-year bond yields have blown out to just below 6 percent, a three month high.
In the US, the Dow fell by 204.57 points, or 1.58 percent, to 12,725, while the the Chicago Board Options Exchange Volatility Index (VIX), which measures fear, advanced by about 9 percent in the session.
In the wider markets, the dollar behaved as a safe-haven, up about a quarter cent at 1.3078 against the euro. The greenback earlier rose to an intraday high of 1.3050.
After the markets close in New York, Alcoa will kick-off earnings season. Given the recent bearish sentiment, there are concerns that a big miss by the US-based aluminium producer would lead stocks and industrial commodities to pull back further.
The markets also continue to digest last week's disappointing US non-farm payroll figures. The American economy only added 120,000 jobs in March - the smallest gain since last October - compared with an upwardly revised 240,000 in February and below expectations of a 207,000 reading.
However, the report did revive gold bulls' hopes that the Federal Reserve might still be forced to launch a third-round of quantitative easing (QE3) later this year. Monetary accommodation is seen as unequivocally bullish for precious metals as extra liquidity tends to debase the dollar and create future inflationary risks.
“[Today's gold] buying has, yet again, been propelled by the hope of another dose of QE with these QE-addicts pinning their hopes on the weak employment figure that came out on Friday,” London-based broker Triland Metals said in a note.
Elsewhere, the Chinese government reported over the weekend that inflation rose at an annual rate of 3.6 percent in March, slightly higher than expected. This lent some support to gold as the yellow metal is often bought as a hedge against inflation.
Additionally, China posted a $5.35 billion trade surplus in March, a reversal from February's $31.5 billion deficit. There was a robust 10.4-percent year-on-year bounce in export sales to the US; however, imports only increased by 5.3 percent, missing a 9 percent forecast.
“Chinese growth remains an issue and this morning’s trade numbers underline the chronic under-performance of the country’s consumption sector compared to its still-critical export base,” Ed Meir, an INTL FCStone analyst, said.
In gold specific news, Comex open interest dropped 11.8 tonnes last week, according to the CFTC, marking a 27-month low and six straight weeks of declines. During the slide, open interest has fallen by a total of 215 tonnes, which has been accompanied by an 8 percent fall in the gold price, Standard Bank noted.
India's jewellers have reopened their shops after being closed for 20 days to protest a government plan to double import duties on gold to four percent. The merchants said that they will not strike again until at least May 11. This is a positive for gold demand, especially considering the Akshaya Tritiya festival begins on April 24.
“Though too early to tell, the re-opening of the Indian Jewellers for business last Saturday should bring out the pent-up demand. Physical demand, especially from India and China, is the key supporting factor for investment demand for gold,” Sharps Pixley said in a note.
| TIME | |||||
|---|---|---|---|---|---|
| Sydney | Tokyo | Ha Noi | HongKong | LonDon | NewYork |
| Prices By NTGOLD | ||
|---|---|---|
| We Sell | We Buy | |
| 37.5g ABC Luong Bar | ||
| 5,218.30 | 4,818.30 | |
| 1oz ABC Bullion Cast Bar | ||
| 4,338.00 | 3,958.00 | |
| 100g ABC Bullion Bar | ||
| 13,901.80 | 12,801.80 | |
| 1kg ABC Bullion Silver | ||
| 1,690.70 | 1,340.70 | |
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