09 February 2011

Gold premiums move down on rising Gold Price

Mondays rise in prices causes premiums to descend

Tuesdays rise in Gold Prices, on the back of a rate increase by the Peoples Bank of China (PBOC), caused 1oz fixed price Gold premiums to fall back further from their recent highs to around 16% yesterday.

Golds positive response to the rate move in China, a further effort to damp rising domestic inflation, was a surprise to some analysts, as the exact same move by POBC in January sparked a considerable sell off of Bullion. However this time the move was seen by the Gold market as a validation of higher inflation in the global economy, all of which is likely to prove supportive to Gold and Silver moving forward.

Rising prices further eased premiums. 1 oz Gold bars in the United States trade currently at 16.2% premium down from the 16.4% yesterday. In the United Kingdom 1 oz Gold Bars were priced at 19.8% premium. In physical Silver prices, 1 oz Silver Bars in the United States are asking 57.5% premium over Silver, and in the UK 1 oz Silver Bars asked 79% premium.

While these premiums would still indicate a very tight supply situation, the fall across the board in Gold and Silver Premiums would appear to be as a result of rising prices rather than significantly easier supply.

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