Physical gold demand weak, big ETF takes a hit

The euro mess and surging US dollar is leaving gold in the doldrums; falls below 2012 opening price

24th Jul 12, 12:17pm by David Chaston

Gold prices fell more than 1% on Monday in London as the market rushed to safety on sharpening euro concerns.

The latest reaction to the euro mess had some commentators refering to market reactions as 'panic'.

These falls, to a closing London price of US$1,572.25 / oz, pushed the level below the level it opened in 2012 (US$1,574.50/oz).

The gold price had risen for 11 years in a row to 2011, but could 2012 be the year when this bull run ends? Analysts say something like QEIII is required to return this market to price growth.

In NZ$ terms, gold slipped below its opening 2012 price of NZ$2,023.78 a month ago and has drifted down since.

Investment buying and Indian and Chinese physical precious metals demand remained weak, analysts said. Physical gold demand is under pressure as a near-record low in the Indian rupee makes gold more expensive for Indian buyers which is among the top consumers of bullion.

Holdings of the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, dropped for a fourth consecutive week after a 2.4-tonne outflow on Friday. The 15-tonne decline marked its biggest weekly fall since late December 2011, Reuters reported.

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Source: Kitco

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8 Comments

by Kunst | 24th Jul 12, 1:21pm 1343092898

David - I’m still a firm believer that gold will surge to US$ 2’000.- plus p/ oz in the next few months.

We live in uncertain times, negative events accumulating/ accelerating with turmoil on many fronts causing fear.

by Kiwi | 24th Jul 12, 3:26pm 1343100406

I wonder why the price of Gold went down?

Could it be perhaps because a large too big too jail bank decided to generate lots of naked Gold shorts?

Someone needs to ressurect the concept of double entry book keeping and apply it to the banks. Put bank derivitaves back on the books!!! Nothing should be off balance sheet.

by We Are Stuffed | 24th Jul 12, 4:06pm 1343102763

David,

maybe you should look at the sales of gold sovereigns on trademe. Whenever I look on trademe the "real gold" sovereigns are selling for higher prices.

The manipulated international gold prices don't have any effect on the trademe sales of the sovereigns.

by busman | 24th Jul 12, 4:07pm 1343102875

Until the world central bankers sort thair s#$t out nothing will change , people just do not understand what is happening in the world today , i have listened to these so called experts from money managers to bankers CNBC you name it they just do not get it. Once people understand the FED , ECB , BOE are bankrupt then we will see the gold not only move higher , their will be no limit once the bond market wants a slice also .

Who knows where it will end ?? $ 2000 - 5000- 10000 ??? the big question i have is where will the NZD / AUD be against the greenback ? and what happens to the NZD/AUD if hyperinflation hits the US ??? i would welcome comments on this please.

by Kunst | 24th Jul 12, 4:21pm 1343103689

Keeping the value of the NZ$

busman – I published that video several times in the past, unfortunately without much interest. I’m sure one day, when purchasing power of currencies crumble it could be a big talking point.

http://www.youtube.com/watch?v=GXC44l942bE

by busman | 24th Jul 12, 4:37pm 1343104629

Thanks for that Kunst i have not seen that but will ahve a good look at all his vids

by economist | 24th Jul 12, 7:07pm 1343113632

Hi busman,

I think anybody with half as brain needs to read and understand this perceptive article, I think it sums things up nicely...

http://www.paulcraigroberts.org/2012/07/19/the-libor-scandal-in-full-perspective/

Secondly when gold moves out of the GLD it's to put out fires elsewhere, that's a bullish sign as it shows they are in need of physical bullion... its unlikely that gold will be coming back, meaning that buyers of GLD are buying nothing but paper... the whole international finance system is corrupt and gold is its arch nemesis....

by Kiwi | 25th Jul 12, 11:18am 1343171905

It Is Absolutely Shocking How Much Gold China is Acquiring Today Stephen Leeb told King World News, “... there is a controlled desperation in China when it comes to acquiring gold.” Leeb, who is Chairman of Leeb Capital Management, also said, “They are acquiring as much as they possibly can without tilting the markets dramatically to the upside.” The acclaimed money manager also stated, “China mined a total of 355 tons, which was by far the largest amount of gold mined for any country. And yet they are still buying every single available ounce they can get in the open market.” Leeb was also quick to point out the strength gold is displaying, “Today we have global stock markets under significant pressure, the US dollar breaking out on the upside, and yet gold is holding firm.” http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/7/24_It_Is_Absolutely_Shocking_How_Much_Gold_China_is_Acquiring.html