Gold Pops Higher Following U.S. GDP Contraction; FOMC Awaited

From Kitco News Wednesday January 30, 2013 8:49 AM Gold prices are trading solidly higher and near the daily high Wednesday morning, in the immediate aftermath of a weaker-than-expected U.S. gross domestic product report. Some more short covering and bargain hunting buying interest are featured. The key outside markets are also in a bullish posture for the precious metals Wednesday morning, as the U.S. dollar index is lower and crude oil prices are higher. February gold last traded up $13.20 at $1,674.00 an ounce. Spot gold was last quoted up $2.30 at $1,666.75. March Comex silver last traded up $0.496 at $31.68 an ounce. Fourth-quarter U.S. GDP contracted by 0.1% on an annual basis. It is the first U.S. GDP decline in over three years. The market place was expecting the figure to be up 1.0%. The gold and silver markets popped higher immediately following the GDP report, on ideas the weak data will prompt the Federal Reserve to adhere to is very easy money policies presently in place. The two-day FOMC meeting ends Wednesday afternoon with its official policy statement to follow. Most market watchers expect the Fed to keep U.S. monetary policy unchanged—meaning continuing asset purchases and a very accommodative stance. However, traders will also be watching for any nuances that are included in the Fed statement, which could provide early clues on when the Fed will stop its asset purchases. European stocks were mostly near unchanged Wednesday, save for a weaker Italian stock market. Euro zone consumer sentiment continues to creep higher, according to the latest figures released from the European Commission Wednesday. The Euro currency continues to rally and hit a fresh 13-month high against the U.S. dollar amid better investor sentiment toward the European Union and its handling of its sovereign debt crisis. The U.S. dollar index is lower early Wednesday and hit a fresh five-week low overnight. The dollar bears hold the solid overall near-term technical advantage, which is an underlying supportive factor for the precious metals. Nymex crude oil futures prices are firmer early Wednesday and hit a fresh 4.5-month high overnight. The crude oil bulls still have upside near-term technical momentum and that, too, is a bullish underlying factor for the metals markets. It’s very possible that as Nymex crude oil prices approach the psychological level of $100.00 it would be a bullish development for the gold and silver markets as well as most other commodity markets. Crude oil is arguably the price leader of the raw commodity sector. Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, and the weekly DOE energy stocks report. The London A.M. gold fixing is $1,666.25 versus the previous London P.M. fixing of $1,663.50. Technically, February gold futures bulls and bears are on a level near-term technical playing field. Prices Wednesday did push back above the key 200-day moving average. The bulls’ next upside price breakout objective is closing prices above psychological resistance at $1,700.00. Bears' next near-term downside breakout price objective is closing prices below solid technical support at the January low of $1,626.00. First resistance is seen at $1,680.00 and then at $1,686.00. First support is seen at $1,670.00 and then at the overnight low of $1,661.80. March silver bulls and bears are also on a level near-term technical playing field. Bulls’ next upside price breakout objective is closing prices above solid technical resistance at last week’s high of $32.485 an ounce. The next downside price breakout objective for the bears is closing prices below major psychological support at $30.00. First resistance is seen at the overnight high of $31.85 and then at $32.00. Next support is seen at $31.50 and then at the overnight low of $31.25.

All the Gold in the World

It is an amazing sight when visualized - This is all the gold mined in history....

Goldman Forecasts Gold Rally - 3 month target $1825

Gold may climb over the next three months as U.S. lawmakers attempt to tackle the country’s debt ceiling and the world’s largest economy slows, Goldman Sachs Group Inc. said, advising investors to place bets on advances. “We see current prices as a good entry point to re- establish fresh longs,” analysts Damien Courvalin and Alec Phillips wrote in a Jan. 18 report. The bank reiterated a three- month target of $1,825 an ounce, as well as a forecast for prices to weaken in the second half as the U.S. economy rebounds. Gold fell 5.5 percent last quarter, the worst performance since 2008, on expectations for a recovery and potential end to central bank stimulus in the U.S. An advance to $1,825 would be consistent with rallies into debt-ceiling decisions, the analysts wrote. Since 1960, Congress has raised or revised the debt limit 79 times, according to the Treasury Department. “The uncertainty associated with these issues, combined with our economists’ forecast for weak U.S. GDP growth in the first half of 2013 following the negative impact of higher taxes will push gold” to the three-month target, they wrote. Gold, which rallied for a 12th year in 2012, traded at $1,688.50 an ounce on the Comex at 5:40 p.m. in Singapore. Holdings in exchange-traded products reached a record last month, data compiled by Bloomberg show. Most-active prices last traded above $1,825 an ounce in September 2011. Borrowing Limit The Treasury has said the U.S. will exceed its $16.4 trillion borrowing authority sometime from mid-February to early March. Financing for government agencies is set to lapse March 27, and lawmakers must pass new spending or cause a shutdown. Also in March, Congress will confront the $110 billion in automatic spending cuts, half from defense, that were postponed in a Jan. 1 tax deal. Goldman restated its outlook for lower prices in the second half of this year, a call echoed by Credit Suisse Group AG and Allan Hochreiter(Pty) Ltd., as the U.S. recovers. As growth improves, prices will likely decline even with continued central bank and exchange-traded fund demand, Goldman said.

The Fed will Take 7 Years to Procure Germany's Gold

The biggest news of the day comes from the official Buba announcement that, in its official capacity as a prudent central bank, it - as first of many - is looking to repatriate some 300 tons of gold from the New York Fed. That, however, is not today's news - that was Monday's news. What is news is that courtesy of the supplied calendar of events in the Buba statement, it will take the Fed some seven years to procure Germany's 300 tons of gold. This is the same Fed that, in its own words, holds some "216 million troy ounces of gold" or some 6720 tons, in its vault 80 feet below ground level. Putting the above in perspective, the amount of gold that Germany will have to wait 7 years for is shown in red. The amount of gold the Fed supposedly holds, is shown in yellow with a shade of tungsten. Why it will take the Fed 7 years to part with an amount of gold that is less than 5% of its total holdings is anyone's guess... unless of course, the bulk of the gold in its holdings has been rehypothecated numerous times to serve as collateral for countless counterparties, and it is no longer clear just who own what to anyone.

Gold Prices Rise After Solid Economic Reports

NEW YORK (TheStreet) -- Gold prices were climbing Thursday, coming off early session lows after a round of U.S. economic indicators reported steady improvement in the housing and labor markets. Gold dropped 70 cents, or 0.04%, on Wednesday. Gold for February delivery was adding $4.30 to $1,687.50 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,689.70 and as low as $1,666.40 an ounce, while the spot price was adding $8.10. Gold prices on the Comex division slumped at the opening of the market, but have moved into positive territory in the first couple hours of trading. "Principally today, anyway, the better economic reports that came out of the U.S. helping the dollar, pushing down gold a little bit," said Will Rhind, managing director at ETF Securities U.S. "We've come off that low as people have stepped in to buy it." The U.S. dollar index was sliding 0.14% to $79.70, while silver prices for March delivery were tacking on 15 cents to $31.70 an ounce. Housing starts rose in December to 954,000 on a seasonally adjusted annual rate, up from November's revised 851,000, according to the Census Bureau. The Labor Department reported that initial jobless claims for the week ended Jan. 12 decreased to 335,000, which also brought the four-week moving average down to 359,250. The improving housing market has suggested greater health in the overall economy, which would suggest a move out of gold -- a safe-haven against inflation and economic uncertainty -- and into other assets. Employment reports have exhibited significant sway on the yellow metal as the Federal Reserve has tied much of its monetary policy to strength in the labor market. The Fed has reiterated its commitment to continue low federal funds rates and quantitative easing measures for as long as the labor situation exhibits soft improvement. Gold has struggled to break out of its current trading range, which may be a result of major economies -- the eurozone, China, the United States -- beginning to reach some certainty in terms of expansion.

Gold Stocks to Surge upto 90% This Year....

Gold will surge to new highs this year, a push upward that will cause a big rally in the depressed shares of precious metals miners, says John Hathaway, portfolio manager at New-York based Tocqueville gold fund. How good might it get for gold miners? Pretty stupendous, in his view. Mr. Hathaway believes that when gold starts to trade sustainably above the $2,000 U.S an ounce level, shares could run up by 60 per cent to 90 per cent. Read the full article here

Light at the End of the Tunnel for Gold

...With governments lacking courage for fiscal discipline, I expect that interest rates will remain in negative territory for a long time. Central bankers will continue to keep the printing presses warm as policies aren’t expected to change. I believe this will keep the Fear Trade buying gold throughout 2013. In addition, emerging market central banks have been diversifying into gold. Net official sector purchases of 425 tons year-to-date is a drastic difference compared to only a few years ago when central banks were net sellers of the precious metal. Only recently, UBS reported that in November, Russia purchased nearly 3 tons of gold and Brazil bought almost 15 tons. Iraq—a notable new buyer—bought 25 tons from August through October. Given that this is the country’s first increase since the early 2000s, “having a new buyer in the central bank space and especially from a new region is an important development,” says UBS. While the Love Trade has been subdued this year, we see light at the end of the tunnel, not a train. One recent development is the increase in mutual fund flows of $32 billion into emerging markets since the announcement of the third round of quantitative easing (QE) in the U.S. This appears to be a powerful precursor for a stronger 2013, which would reignite the Love Trade in China and India. To see the full article click here