SINGAPORE, May 17 (Reuters) - Gold edged up on Friday as stock markets paused after rally, but the metal was still on track for its worst weekly decline in a month as investors cut exposure to bullion, sending holdings in exchange-traded funds to the lowest in four years. FUNDAMENTALS * Spot gold was up 0.17 percent to $1,388.11 an ounce by 0038 GMT, having fallen to a four-week low of $1,369.29 on Thursday as renewed liquidation in gold ETFs and the recent drop below the $1,400-per-ounce level spooked investors. * U.S. gold for June delivery was little changed at $1,386.70. * SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.55 percent to 1041.42 tonnes on Thursday - the lowest in four years. * Premiums for gold bars rallied to all-time highs in Hong Kong and Singapore on Thursday after bullion's steepest drop since its April sell-off fuelled another round of buying that constricted supply. * Gold investment nearly halved in the first quarter as a brighter view of the U.S. economy prompted investors in the West to favour other assets, but Chinese coin and bar demand hit a quarterly record of 109.5 tonnes, the World Gold Council said on Thursday. * Indian gold futures fell 1.5 percent on Thursday, extending losses for a second straight session, to hit their lowest level in nearly a month in line with global markets. * The Shanghai Gold Exchange (SGE) will launch after-hours trading for Fridays on May 31 as part of its efforts to help its members better manage price risks, the bourse said in a statement on Thursday. * For the top stories on metals and other news, click , or MARKET NEWS * The Nikkei share average fell for a second day on Friday as caution over the recent steep rises continued to spur profit-taking, while a pullback in Wall Street soured investor sentiment. * Global equity markets fell on Thursday after a regional president of the Federal Reserve said the U.S. central bank could begin to ease up on its loose monetary policy this summer, leading the dollar to recover against the euro. DATA/EVENTS (GMT) 1355 U.S. TR/U Michigan sentiment index 1400 U.S. Leading indicators PRECIOUS METALS PRICES 0038 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1388.11 2.42 +0.17 -17.10 Spot Silver 22.67 0.01 +0.04 -25.13 Spot Platinum 1479.99 0.99 +0.07 -3.58 Spot Palladium 734.25 -1.75 -0.24 6.11 COMEX GOLD JUN3 1386.70 -0.20 -0.01 -17.25 2478 COMEX SILVER JUL3 22.63 -0.03 -0.13 -25.14 855 Euro/Dollar 1.2884 Dollar/Yen 102.21 COMEX gold and silver contracts show the most active months Source: http://www.reuters.com/article/2013/05/17/markets-precious-idUSL3N0DY04P20130517
Gold futures tumbled below $1,400 an ounce, extending the longest slump in almost three months, as the dollar’s rally eroded demand for the metal as an alternative investment. Silver fell to a three-week low.
The greenback climbed to a nine-month high against a basket of major currencies. The euro fell to the lowest in almost six weeks against the dollar as the euro-area’s recession extended to a record sixth straight quarter. Gold has declined 17 percent this year as some investors lost faith in the metal as a store of value.
Prices retreated below $1,400 for the first time since April 19 as stimulus measures by central banks and record-high equity markets fail to accelerate the pace of inflation. While consumer demand for coins and jewelry helped rally the precious metal by 5.7 percent from a two-year low on April 16, gold is headed for its first annual decline since 2000, halting 12 straight years of gains.
“Physical demand can provide some support, but gold cannot do well in a deflationary environment,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “The dollar has emerged as the preferred flight-to-quality instrument, and lots of money has also moved to equities.”
Gold futures for June delivery fell 2 percent to settle at $1,396.20 at 1:38 p.m. on the Comex in New York, after touching $1,389, the lowest for a most-active contract since April 19. Prices dropped for a fifth straight session, the longest slump since Feb. 20.
The metal touched a 26-month low of $1,321.50 on April 16, entering a bear market with prices down 26 percent from a closing high in August 2011. Gold reached an all-time peak of $1,923.70 on Sept. 6, 2011.
Yesterday, holdings in exchange-traded products backed by gold dropped 6.2 metric tons to 2,219.7 tons, the lowest since July 2011, according to Bloomberg data.
ETP holdings have slumped 16 percent in 2013 after gaining every year since the first product was started in 2003. While the selloff has been faster than expected, a further drop will probably mean more price declines, Goldman Sachs Group Inc. analysts including Jeffrey Currie said in a report dated yesterday.
Last month’s plunge in prices fueled retail demand. The U.S. Mint said April 23 it ran out of its smallest gold coins, while Australia’s Perth Mint said volumes jumped to a five-year high. India’s bullion imports may surge 47 percent to 225 tons in the second quarter to meet consumer buying, according to the All India Gems & Jewellery Trade Federation. Imports by China from Hong Kong more than doubled to an all-time high in March.
Silver futures for July delivery fell 3.1 percent to $22.658 an ounce on the Comex, the biggest decline since May 1. Earlier, the price touched $22.445, the lowest since April 18.
On the New York Mercantile Exchange, palladium futures for June delivery advanced 0.3 percent to $729.05 an ounce, the highest settlement since April 11. Platinum futures for July delivery fell 0.7 percent to $1,490.70 an ounce.
One of the lessons that gold bugs are learning, in the most painful way possible, is that you can’t trade a manipulated market. When big players with regulatory immunity can move an asset’s price — and can see resistance/support levels and moving averages just as clearly as anyone else — smaller traders don’t stand a chance.
In the gold-is-manipulated script, governments and their bullion bank proxies push the price to levels where they know hedge funds and other traders have stop-loss orders, which kick in and send the price careening lower. Then the manipulators buy back their short positions, thus gaining a two-fer: fleecing the flock for a nice profit, and crushing the spirits of stackers and preppers and regular folks who value honest money.
Which brings us to the following article, published by a major bullion dealer:
The Golden Bull & Price Pullback Gift
Rarely in bull markets do we see opportunities like the one being presented to silver and gold investors right now.
Silver & Gold spot prices are now retesting their recent low price points.
Current and favorable bull market fundamentals have not changed.
Below is a longterm view of gold’s bull market valuation channel over the past 15 years:
We view this current price pullback as a buying gift for gold and silver investors.
Now, for chartist in a normal market this picture would indeed imply a nice trade setup. But bullion bank traders can see this channel too, and for them it’s a bullseye. Just push gold through the bottom of the channel and a whole world of technicians who for some reason think their charts still have meaning will see that the up-channel has been broken, and, like good, dispassionate traders who cut their losses when they’re wrong, will sell their futures contracts, their GLD shares, and maybe their mining stocks, tacking yet another vertical drop onto this correction.
This might not happen, but if it doesn’t it will be because the bullion banks have had their fun and are now on the other side of the trade. But make no mistake, it’s their decision; in the short run this is their game.
Longer term, of course, is a very different story. Fundamentals always win eventually, and with the whole world on a borrow/print/lie-about-it binge, gold’s fundamentals just keep getting better. Excessive debt leads to currency war leads to soaring gold. And when the paper players are finally overrun by physical demand, the people who have been quietly accumulating bullion and high-quality mining stocks will barely remember all this drama.