31 October 2011

Gold Pulled in Opposite Directions By Dollar and Euro

Yen intervention and fast fading European debt optimism pull at Gold and Silver

There was much for the Gold market to digest on Monday as conflicting bullish and bearish factors buffeted bullion.

Gold opened in London on the back foot as the US Dollar rose following Japan's intervention to weaken the Yen. Gold was down as much as 2.2% in morning trading, but rallied during the morning.

Conversely, Gold was well supported in Europe. Spanish and Italian bond yields have stayed high, with Italian yields touching 6.15%, hovering just below August levels where the ECB last intervened. This activity in the European Sovereign debt market, just a week after the announcement of a huge expansion of the EFSF, does not bode well for an orderly conclusion to the Euro's problems. Golds Euro denominated price reflected this development and as such, by Monday Evening in London Gold in Dollars had pared losses to be down 1.69%, whereas in Euros Gold was actually up 0.4%.

Equity markets in Europe and the US took a battering with the French CAC 40 down 3.16%, the FTSE 100 fell 2.77%, the DOW down 2.26%, and the S&P 500 down 2.47%.

In the physical retail market, BullionSupermarket.com reported an increase in availability of small Gold Bars. In the United States, the number of available 10 gram gold bars increased 12.5% on the same time last week. Over the same period, availability of 1 ounce Gold fell slightly. Premiums on 10 gram gold bars were at 37.24%

In the physical Silver retail market, we saw an increase in availability of medium sized and larger Silver Bars. In the United States, the number of 10 troy ounce silver bars for sale increased 24% over the week. Supply of 100 ounce investment Silver bars rose 53%.


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