Thursday, February 23, 2012

Gold Jumps to 3-Month High on Options Expiry, Euro Oil Price Hits New All-Time Record

Gold and silver are vaulting on today's March options expiry. Blythe must have been on to our plans to order inventory for the SD Bullion roll-out with today's options expiration.

London Gold Market Report
from Adrian Ash
Thurs 23 Feb., 09:15 EST

The PRICE of PRECIOUS METALS rose further Thursday morning in London, pushing higher from last night's sharp jump in New York, with Dollar-priced gold trading at its highest level since mid-November above $1780 per ounce.

Physical gold holdings backing the giant SPDR Gold Trust last night remained unchanged, however, both from Tuesday's finish and one week ago.

Thursday's New York close marks expiry for March options on US gold futures, with the bulk of traders interest between $1750 and $1800 per ounce.

"The outlook remains bullish with a further gap up today," said a London dealer this morning after the price rose again at the start of European gold trading.

"[Relative strength] is confirming the trend," says the latest chart analysis from Scotia Mocatta, with other technical indicators also giving a "buy signal".

"There is good support at 1749...The next [Dollar price] target is 1803, the November high."

In the physical market, however, Wednesday's late "move higher was accompanied by light selling," says today's note from Standard Bank's commodity team – selling "which was extended by participants in Asia."

"At this price level, most buying is from funds and investors, and there is very little buying on the physical side," agrees a Hong Kong gold trader, quoted by Reuters.

European stock markets held flat Thursday morning meantime, after Asian equities dropped 0.5% and Brent crude oil – the European benchmark – rose to 9-month highs above $124 per barrel.

Versus the Euro, Brent crude today jumped to new all-time highs above €93 per barrel, even as the Euro currency itself jumped to an 11-week high above $1.33.

The gold price in Euros today recorded an AM London Fix of €1334 per ounce (€42,889 per kilo) – a price beaten on only four trading days last September, and once again at the start of this month.

"The current February high at €1339 remains in focus," says the latest technical analysis from Axel Rudolph at Commerzbank.

"Should it be surpassed, a rise towards last year's all-time high at €1359 should be seen."

Longer-dated government bonds meantime ticked lower in price, nudging 10-year US Treasury yields back above 2.0%, after Germany reported better-than-expected business sentiment.

UK mortgage-lending and wholesale business data also pointed higher this morning, while the giant Royal Bank of Scotland – four-fifths owned by the state after near-collapse in 2008 – reported a £2 billion loss for 2011 ($3.1bn), more than half of which came from writing down the value of Greek government bond holdings.

Bullion banks trading gold in British Pounds today held the price above £1130 per ounce, breaking November's high and barely 5% below the sharp spike to all-time records of September 2011.

"There is always a case to be made for gold," a Singapore gold trader told Reuters earlier, "as long as the central banks keep taking new easing measures, or keep indicating they will take more new measures down the road."

Dallas Fed president Richard Fisher again repeated on Thursday that he didn't agree with the latest round of Quantitative Easing in the United States, telling CNBC that the Federal Reserve's latest policy comments were "talking down the economy".

New jobless claims in the United States last week showed no change from the week before, new data said today.

Continuing claims over the last month have averaged their lowest level since March 2008, according to Reuters.

"Base metals have been exceptionally quiet, with thin volumes and narrow intraday ranges being seen right across the complex," says Thursday's note from Standard Bank in London.

Silver prices rose alongside gold and the other precious metals this morning, but held below $35 per ounce, some 30% off April 2011's record highs.

Adrian Ash