London Gold Market Report
from Ben Traynor
BullionVault
Thursday 16 August 2012, 07:45 EDT
Gold “Trapped” in Same Range for Over 2 Months, Central Banks Add Record Volumes of Gold in Q2
SPOT MARKET prices for buying gold hovered just above $1600 per ounce Thursday morning in London, well within their trading range of recent weeks, having risen back above that level amid ongoing speculation over quantitative easing.
“Gold remains trapped in a range where it has been for two-and-a-half months,” says a note from bullion bank Scotia Mocatta.
Data published by the World Gold Council Thursday show that global gold demand between April and June was down on the same period last year, although central banks were buying gold in record quantities.
Silver prices meantime hovered just below $28 per ounce Thursday morning, also in line with recent trading. Stocks and commodities were also flat and US Treasury bonds fell.
A day earlier, gold prices climbed back above $1600 per ounce Wednesday, after news that US consumer inflation fell by more than expected last month.
“This was enough to stimulate the QE3 rumor, yet again,” says a note from Swiss precious metals group MKS, referring to a potential third round of quantitative easing from the Federal Reserve.
Another round of QE from the Fed looks “unlikely in the short term,” says a note from Credit Suisse.
“What counts at the moment is the ‘real’ economy and while certainly far from booming, this does not appear weak enough for the Fed to act.”
Global demand for buying gold fell 7% in the second quarter of 2012 compared the same period last year, according to the World Gold Council’s Gold Demand Trends published Thursday.
“Gold’s performance reflects the continuing challenging economic climate,” says Marcus Grubb, the WGC’s managing director, investment.
“A softness in India and China, who between them represent over 45% of the total second quarter jewelry and investment demand accounts for much of the slowing of global gold demand. ”
Indian demand in the three months to June was down 38% compared to the same period last year, although India reclaimed its traditional position as the world’s biggest gold buying nation with demand at 181.3 tonnes. Rupee gold prices hit record highs in Q2 as the Rupee fell against the Dollar.
