FS: US GOLD - Comex gold rises on strong Hong Kong demand,
By Tom Jennemann, Correspondent tom.jennemann@fastmarkets.com 973-204-3383
New York 05/06/2012 - Gold futures posted some modest gains Tuesday on strong Chinese import data and expectations for additional monetary stimulus from all corners of the world.
Gold for August delivery on the Comex division of the New York Mercantile Exchange was last up $4.40 at $1.618.30 an ounce. Trade has ranged from $1,613.90 to $1,624.80.
In Asian fundamentals, gold imports into Hong Kong reached a lifetime high of 103.6 tons in April, up 6.5 percent from 63 tons the previous month. Through April, imports have reached 431.2 tons, more than half of last year's volume.
“If this dynamism continues for the remainder of the year, 2012 could see China importing more than 700 tons of gold,” Commerzbank AG said in a note.
“Besides higher demand from retail investors as the middle class steadily grows, the Chinese central bank will no doubt also have taken advantage of the reduced price to expand its gold reserves,” said the bank analysts, who added that the data supplied by Hong Kong is extremely important given that China itself does not publish any gold import figures.
Meanwhile, much of gold strength since last Friday has been based on traders' bets that central banks will soon pump more liquidity into the global economy to boost growth and protect banking systems.
In the US, a possible catalyst for a third round of so-called quantitative easing (QE3) could be May's hugely disappoint jobs number - the American economy added just 69,000 jobs last month.
Monetary accommodation is seen as unequivocally bullish for gold as extra liquidity tends to debase the dollar and create future inflationary risk.
Additionally, the US presidential election will be held in November, so the Federal Reserve might only have a short window to act before action could have the appearance of being politically motivated.
“No one on the Federal Reserve's Board of Governors and none of the regional voting presidents shall want to be accused of supporting or undermining a current administration,” Dennis Gartman, editor of the Gartman Letter, said.
“If there is to be an announcement of some sort of QE3 accommodation, it shall almost certainly be voted for at the upcoming meeting this month or at the very latest at the late July meeting. After that, the election shall loom too large and the FOMC will pull-in-its-horns and adopt as apolitical a stance as it is able to do,” Gartman added.
But the US is hardly the only region on the planet where the government is under pressure to pump extra cash into the marketplace.
China's official PMI dropped to 50.4 in May compared with 53.3 in the previous month, which was the lowest reading since November 2011. A figure above 50 indicates expansion.
The release of manufacturing data supports the case for Beijing to take more decisive easing actions, which would have positive implications for gold prices, HSBC’s chief China economist Qu Hongbin said in a note.
In the wider-markets, the euro was last about a quarter cent stronger at 1.2461 against the dollar, while the Dow Jones industrial average and S&P 500 were both essentially flat.
Light sweet crude (WTI) oil futures for July delivery on the Nymex were down 17 cents at $83.81 per barrel, while the most-actively traded Comex copper contract was at $3.2920 per pound, down 1.5 cents.
As for the other precious metals, Comex silver for July delivery was up 38.3 cents at $28.390 an ounce. Trade has ranged from $28.080 to $28.465.
Platinum futures for July delivery on the Nymex were up $10.70 at $1,438.00 an ounce, while the September palladium contract was at $617.20 an ounce, up $3.30.
