Here are the most significant news from the past week with effect on gold and silver prices:
- The European Central Bank (ECB) has announced that it will no longer accept Greek Sovereign Bonds as collateral
- The Eurozone countries have agreed a 100 Billion Euro bailout for Spanish Banks.
- The first tranche of 30 Billion Euros will be transferred before the end of July
- The Spanish Government is making 15 Billion Euros available to the Spanish regional administrations. The Government insists this would not affect the borrowing plans of the Central Government
- The Spanish Government revised its growth forecast for 2013 from 0.2 per cent to minus 0.5 per cent (recession). It expects that the interest payments of the
- Spanish Government will rise by 9.1 Billion Euros, compared with interest payments in 2012
- The yield for Spanish 10-year bonds rose on Friday to 7.27 per cent, while the yield for Italian 10-year bonds rose to 6.17 per cent
- Meteorologists expect the weakest monsoon in India since 2009, which could have some negative implications for physical gold demand from India
- The Indian rupee finished the week at 55.32 to the dollar
- A significant reduction in Option volatilities has been registered, for all four precious metals
Gold
US $ 1583.00 – down US $ 5.00 from last week.
Gold managed to stay the whole week in a relatively small trading range. The “summer hole” is now upon us and it might be expected to stay very quiet for some weeks to come. However, this scenario is not correct if you look at the price for gold in Euro terms. Gold against Euros have regained the Euro 1300 level and that is the result of a steady move upwards. This development is overshadowing the “normal” gold against US Dollar price moves and the uncertainties involving the Eurozone are here to stay. The situation in Greece will be evaluated next week from the Troika (IMF, EU and ECB). There have been comments from Eurozone members that there has been no progress made whatsoever concerning the privatisation promises undertaken by the Greek government. Spain has
moved now very much into the centre of attention and the economic developments in Spain do not look very encouraging. Physical buying has been slower than usual for this time of year and the discount for physical gold in Dubai is also evidence of lacklustre physical markets. However, there are plenty of reasons to view this period as a buying opportunity with significantly more interest anticipated in early September. The remaining months of the year bear enough challenges from the Eurozone, Chinese growth expectations and, last but not least, the US.
The presidential election and potential uncertainties evolving about the handling of the “fiscal cliff” are all potentially major reasons for a significant raise in physical off-take in gold later in the year. The Commitment of Traders Report (COTR) shows a reduction of both long and short positions, which amplifies the view from some analysts that there is no early chance for a QE3 program from the Federal Reserve Bank.
Option volatilities midrates : Gold atm (at the money)
1 month 15.00 % down 1.50 %
3 month 16.00 % down 1.50 %
6 month 18.50 % down 1.00 %
1 year 21.00 % down 1.00 %
Discount 1kg Gold bars loco Dubai (DGD 995 fine) against loco London: US $ 0.25
EFP Spot Gold to August Comex: US $ minus 0.80
ETF: Holdings are at 2504 tons
Support : 1550 and 1523 Resistance: 1600 and 1628
Silver
US $ 27.31 – unchanged from last week.
Silver has finished a “good” week and closed unchanged. Silver prices have performed well last week and prices looked well supported when the US $ 27 level was tested. It appears to be still under the influence of the buying spree, which was initiated as cover for the Sprott Physical Silver ETF. It appears that a number of short positions had to cover and these investors are not involved in silver in the short-term. The overall technical picture for
silver, which looked very weak a couple of weeks back, is now starting to show signs of strength and the likelihood is increasing that silver prices have, or are close to, bottoming out. A regaining of the US $ 28 level, with a weekly close above that level, would go a long way towards confirming this potential turnaround situation.
The COTR report shows that fresh short positions have been added, while the long positions have not changed during last week’s proceedings.
Option volatilities midrates : Silver atm (at the money)
1 month 27.50 % down 3.50 %
3 month 31.00 % down 2.00 %
6 month 33.00 % down 1.50 % year 35.00 % down 0.50 %
EFP Spot Silver to September Comex: US $ minus 6.25 cents
ETF: Holdings are at 15330 tons
Support : 26.09 and 24.95 Resistance : 28.00 and 28.50
Platinum
US $ 1412 – down US $ 12 from last week.
The discount to Gold has increased to over US $ 170. The Commitment of Traders Report
shows a rise of both long and short positions. Last week`s trading ranges can easily be
described as smallish, compared to other weeks, earlier in the year. The US $ 1400 level
has again been tested but the price performance has not been that encouraging. Data
from Switzerland about Platinum shipments are non-conclusive and there are fears that
further proof of an economic slowdown, especially in China, might lead to further price
reduction in the platinum market. There are definitive signs for a current overproduction
and these issues need to be addressed before a meaningful recovery can be expected.
Option volatilities midrates : Platinum atm (at the money)
1 month 18.00 % down 1.00 %
3 month 20.00 % down 1.25 %
6 month 21.50 % down 0.50 %
1 year 23.50 % down 0.50 %
EFP Spot Platinum loco Zurich to October NYMEX: US $ 0.75
ETF: Holdings are at 46 tons.
Support : 1400 and 1385 Resistance : 1478 and 1500
Palladium
US $ 574 – down US $ 6 from last week.
Palladium had a quiet week. Palladium positions, longs and shorts, have been reduced according to the Commitment of Traders Report. The relative tightness of the current trading range is evidence of a lack of interest from the investment community at this stage of the proceedings. The technical outlook for palladium does look more healthy and encouraging than it currently does for platinum, but there are signs of investor “fatigue” inhe market.
Option volatilities midrates: Palladium atm (at the money)
1 month 21.00 % down 2.50 %
3 month 23.00 % down 2.50 %
6 month 25.00 % down 1.50 %
1 year 27.00 % down 2.00 %
EFP Spot Palladium loco Zurich to September NYMEX: US $ 0.00
ETF: Holdings are at 63 tons
Support: 560 and 540 Resistance: 607 and 628
