Gold Strikes Record At $1,440 On Libya Chaos

LONDON : Gold glistened last week, striking a record peak as investors hunted for a safe haven amid violent unrest in Libya that has sparked fears about spreading instability in the Middle East and North Africa.
New York crude crossed $104 per barrel to reach the highest level for 30 months as the African nation was forced to slash exports.
"Unrest in the region continues apace, with Libya effectively remaining out of the oil market; while the replacement of the lost Libyan barrels is eating into spare capacity, rampant demand growth is adding further pressure," said Barclays Capital analyst Sudakshina Unnikrishnan.
Commodities won further support on Friday as the euro bounced above $1.40 for the first time in nearly four months, after a surprise drop in the US unemployment rate and accelerated job creation. A weaker greenback makes dollar-priced commodities cheaper for buyers holding other currencies and tends to stimulate demand.
Precious metals: Gold peaked at $1,440.32 per ounce on Wednesday, while silver struck a 30-year high of $35.36 on Friday. On the London Bullion Market, gold closed the week at $1,427, up from $1,402.50 a week earlier. Silver closed at $34.43, up from $32.54. On the London Platinum and Palladium Market, platinum climbed to $1,828 an ounce from $1,791 and palladium rose to $811 from $785.
Oil: New York crude surged to $104.32 on Friday, a level last seen on Sept 29, 2008, as violence escalated in Libya.
"It seems likely that soon there will be no oil exports at all from Libya, a loss of 1.4 million barrels per day to the global markets, and a particular concern to refiners in Italy and elsewhere in Europe," said said Deutsche Bank analyst Adam Sieminski.
The head of Libya's National Oil Corporation, Shukri Ghanem, said on Thursday that production had been halved.
Brent crude has been trading higher than WTI partly because of high US energy inventory levels.
"It's taken a while for the WTI contract to wake up to the potential stresses in the oil market," said GFT analyst David Morrison.
Brent crude for April delivery rallied in London on Friday to $115.77, compared with $111.57 a week earlier. On the New York Mercantile Exchange, Texas light sweet crude for April traded at $103.45, compared with $97.24 a week earlier.Base metals: Prices mainly rose as traders took direction from the faltering dollar. On the London Metal Exchange (LME), copper for delivery in three months rose to $9,935 a tonne from $9,711 a week earlier. Three-month aluminium increased to $2,612 from $2,558, lead to $2,638 from $2,495, tin eased to $31,750 from $31,788, zinc to $2,491.25 from $2,493, while nickel rallied to $28,900 from $27,710.
Cocoa: The market continued to trade at 30-year highs amid worsening unrest in top producer Ivory Coast.
On the London International Financial Futures and Options Exchange (LIFFE), cocoa for May rallied to 2,414 a tonne from 2,371 a week earlier.On the New York Board of Trade (NYBOT), cocoa for May increased to $3,766 a tonne from $3,637 a week earlier.
Sugar: Prices gained ground on the NYBOT, with unrefined sugar for delivery in May rising to 30.62 US cents a pound from 27.64 cents a week earlier. On the LIFFE, a tonne of white sugar for May increased to 759.30 from 699.50 a week earlier.
 
Coffee: Prices hit a 34-year high in New York as traders fretted over inventories that are at their lowest levels since the International Coffee Organisation started tracking them in the 1960s. On the NYBOT, Arabica for delivery in May rose to 277.30 US cents a pound from 266.55 cents a week earlier. On the LIFFE, Robusta for May rose to $2,403 a tonne from $2,328 a week earlier. AFP

Source: http://www.bangkokpost.com

Metals-Energy Update: Silver Soars To $35, Gold Rebounds, Oil Spikes

Published on: March 06, 2011 at 17:25 
By Devi Gopalakrishnan, Commodity Online Info Service
Gold prices boosted by safe haven appeal rebounded to $1428 levels but still short of the record 1440 set on March 2 while silver prices soared to $35 an ounce on mounting unrest in Libya. Middle East and North African tensions continue to impact commodities especially crude oil which has seen a surge of 6.7% in New York this week.

U.S. Commodity Futures Trading Commission (CFTC) informs that net long positions in U.S. gold futures contracts held by speculators rose nearly 10% last week as bullion prices rose by 2.5 percent.

Precious Metals
US Gold futures reorded 1.4% growth thanks to tension in Libya that gave a boost to safe haven appeal of gold. Bullion hit a record high of $1,440.10 an ounce on March 2, recording its fifth consecutive weekly gain on fears that Libya's rising unrest may spread across the Arab world.

Gold may gain in New York as turmoil in Libya and concern inflation will accelerate boost demand for an alternative investment.
Gold futures for April delivery rose $12.20, or 0.9 percent, to settle at $1,428.60 an ounce on the Comex in New York. The metal rose 1.4 percent this week.

Silver futures for May delivery jumped $1, or 2.9 percent, to $35.327. Earlier, the price reached $35.405, the highest since March 1980. In that year, the metal reached a record $50.35. This week, silver gained 7.3 percent, the sixth straight increase.

Palladium futures for June delivery fell $5, or 0.6 percent, to $809.80 an ounce on the New York Mercantile Exchange. The price, up 2.8 percent this week. Platinum futures for April delivery rose $4.90, or 0.3 percent, to $1,837.90 an ounce. The metal up 1.9 percent this week.

In Indian market, MCX April Gold Futures opened the week at 20971 and rose 0.60% to 21098 after hitting a high of 21190 while June contract rose 0.29% to 21398 per 10 gms after hitting a high of 21470. MCX Silver March opened this week at Rs.50423 and ended higher by 0.98% to Rs 50740 after hitting a high of 52925.

Crude Oil
Crude oil surged this week on concern unrest in Libya will spread to other North African and Middle East energy exporters, curbing shipments. Oil prices may rise further next week as civil unrest in the region fuels concerns of prolonged supply disruption.

Crude oil for April delivery increased $2.51 to $104.42 a barrel on the New York Mercantile Exchange. The contract rose 6.7 percent this week.
Brent crude for April settlement rose $1.18, or 1 percent, to end the session at $115.97 a barrel on the London-based ICE Futures Europe exchange. The contract gained 3.4 percent this week, the sixth straight weekly increase.

Brent may advance past $119 a barrel as prices continually surge above ranges and moving averages, according to technical analysis by Glen Ward, head of retail derivatives at London Capital Group Holdings Plc. (LCG).

At MCX, Crude oil March contract rose from Rs.4485 to Rs.4731, up by 5.36% after hitting a high of 4739 whereas the April contract gained 4.84 per cent to Rs.4806 after hitting a high of 4813.

Base Metals
Copper prices at London Metal Exchange gained 1.5% this week as tensions mounted in Libya and Middle East causing fears that rising crude oil prices will stoke inflation and curb growth. At LME, three-month copper fell to $9,895 on Friday after a recent record high fo $10,190 per tonne.

Copper is well supported by global economic recovery signals and estimates of growing Chinese demand. Copper demand in China may grow by 7 percent this year on strong economic growth, according to Jiangxi Copper Co. Demand for copper is surging as the nation plans to build more homes, autos and appliances and upgrade power-grid networks. Copper touched a record $10,190 a ton last month after surging 30 percent in 2010 as the global economy recovered from the worst recession since World War II.

Futures on the Comex in New York gained as much as 0.5 percent to $4.5120 a pound, before trading at $4.5105. May- delivery copper on the Shanghai Futures Exchange rose 0.8 percent to end at 74,720 yuan ($11,378) a ton.

Lead in London gained 0.5 percent to $2,629.75 a ton, nickel rose 0.4 percent to $28,975 a ton and tin added 0.3 percent to $31,755 a ton. Aluminum was little changed at $2,615 a ton, and zinc was little changed at $2,511.25 a ton.75 levels, June contract prices rose marginally from Rs.452.50 per Kg to Rs.453.10 after hitting a high of 458.75.

Natural Gas
Natural gas for next-day delivery in New York declined to the lowest price in three months as scheduled gas shipment to the region’s residential users tumbled 17 percent.

Prices at the Transco-Z6 hub, which delivers gas to the New York City region, dropped 13 percent as gas delivery to households in New York state fell to 3.01 million dekatherms (about 2.93 billion cubic feet), down from yesterday’s 3.62, according to Bloomberg data.

Transco-Z6 prices declined to $4.3999 per million British thermal units on the Intercontinental Exchange, the lowest levels since Nov. 24. Gas at the Tetco-M3 hub, which also transports gas to the New York area, slid 3.2 percent to $3.9806.

Scheduled gas shipments for residential use in the U.S. declined 11 percent to 32.6 million dekatherms, the lowest level since Nov. 16, according to the Bloomberg data. Temperatures will be above normal in the U.S. East and Midwest through March 8, according to Commodity Weather Group LLC in Bethesda, Maryland.

In India at MCX, Natural gas March contract closed lower by 4.13 % to Rs.171.50, April contract prices declined from Rs.187.90 per Kg to Rs.177.50, down by 5.80 per cent.

Major Headlines
Commexes turnover has crossed Rs 100 trillion mark till Feb 15: FMC
The Forward Markets Commission (FMC) on Wednesday said the turnover at the commodity futures market crossed Rs 100 trillion-mark till February 15 of the current fiscal, buoyed by futures trading in bullion and energy items. The turnover stood at Rs 66.24 lakh crore in the same period last year.

Gold gains 1 percent, silver jumps on oil rally, Libya
Gold rose above $1,430 an ounce on Friday, while silver surged 3 percent to 31-year highs, as soaring oil prices fueled by widening clashes in Libya prompted investors to pile into safe havens.

Rapid growth of BRIC strengthened trade ties with low-income nations: IMF
The rapid economic growth of the BRIC — Brazil, Russia, India and China — has helped create the global commodity boom and strengthened its trade ties with low-income countries, the International Monetary Fund said.

Source: http://www.commodityonline.com

Stock Collection Notice - March 2011

Announcement!!!

With effect from 21st Feb 2011, customer MUST proceed with full payment upon booking and the 10% of booking payment is not allowed with immediate effect. The collection period of stock will be fixed at 3-5 days from the purchase order date. Customer are encouraged to collect the stock based on the date that stated on the Stock Collection Notice. 

Stock Collection Notice (Mar 2011)

Customers are advised to call our branches for stock reservation and collection based on the schedule below:

Gold Product (999.9 Gold Bar & Coins)

Purchase Order Dated	Stock Collection Period
1st – 31st Mar 2011	5 days from the Purchase Order Date

Gold Product (916 Gold Dinar Coins)

Purchase Order Dated	Stock Collection Period
1st – 31st Mar 2011	3 days from the Purchase Order Date

Silver Product

Purchase Order Dated	Stock Collection Period
1st – 31st Mar 2011	3 days from the Purchase Order Date

Note :

i) Customers MUST call our branch for stock reservation before any collection.

ii) Due to the security reason, Stock Collection only allowed during office hours, all collection after 7pm will not be entertained.

iii) Customer MUST made full payment before stock collection, no deposit of 10% will allowed after 21st Feb 2011.

iv) Original bank-in slip MUST be provided upon stock collection.

v) New Dealers are advised to get familiar with the stock collection method and don't hesitate to seek for the assistance from their Master Dealer if they have any doubt.

Stock Collection Notice (Feb 2011)

Customers are advised to call our branches for stock reservation and collection based on the schedule below:

Gold Product

Purchase Order Dated	Stock Collection Period
1st Feb – 6th Feb 2011	10th Feb – 12th Feb 2011
7th Feb – 13th Feb 2011	21st Feb – 26th Feb 2011
14th Feb – 20th Feb 2011	7 days from the Purchase Order Date
21st Feb – 28th Feb 2011	7 days from the Purchase Order Date

Silver Product

Purchase Order Dated	Stock Collection Period
1st Feb – 6th Feb 2011	10th Feb – 12th Feb 2011
7th Feb – 13th Feb 2011	21st Feb – 26th Feb 2011
14th Feb – 20th Feb 2011	7 days from the Purchase Order Date
21st Feb – 28th Feb 2011	7 days from the Purchase Order Date

Note :

i) Customers MUST call our branch for stock reservation before any collection.

ii) Due to the security reason, Stock Collection only allowed during office hours, all collection after 7pm will not be entertained.

iii) Customer MUST made full payment before stock collection, no deposit of 10% will allowed after 21st Feb 2011.

iv) Original bank-in slip MUST be provided upon stock collection.

v) New Dealers are advised to get familiar with the stock collection method and don’t hesitate to seek for the assistance from their Master Dealer if they have any doubt.

Stock Collection Notice (Jan 2011)

Customers are advised to call our branches for stock reservation and collection based on the schedule below:

Gold Product

Purchase Order Dated	Stock Collection Period
16th Jan – 25th Jan 2011	7th Feb – 12th Feb 2011
26th Jan – 31st Jan 2011	13th Feb – 19th Feb 2011

Silver Product

Purchase Order Dated	Stock Collection Period
16th Jan – 25th Jan 2011	7th Feb – 12th Feb 2011
26th Jan – 31st Jan 2011	13th Feb – 19th Feb 2011

Note :

i) Customers MUST call our branch for stock reservation before any collection.

ii) Due to the security reason, Stock Collection only allowed during office hours, all collection after 7pm will not be entertained.

iii) To make the process faster and smoother, customers are encouraged to make full payment through bank before stock collection.

iv) Original bank-in slip MUST be provided upon stock collection.

v) New Dealers are advised to get familiar with the stock collection method and don’t hesitate to seek for the assistance from their Master Dealer if they have any doubt.

MASSIVE gold demand continues to break records in China

In amongst all the comment and analysis regarding the effects of the various Middle Eastern and North African power struggles on the gold price, the latest news on Chinese domestic gold demand has almost passed by unnoticed.  According to Peer Hickson, the global commodities strategist for gold-focused Swiss Bank, UBS, in a report by Bloomberg, Chinese gold demand hit no less than 200 tonnes in the first two months of the current year.  If that is extrapolated over a fill year - and the gold purchasing momentum caused by inflation-nervous purchasers suggests that there is even a possibility that demand could rise - this would mean that the Chinese consumer could be in line to buy close on 50% of global mined gold (and this does not include what the country's Central Bank may be salting away as well.)

The 200 tonnes in two months figure is MASSIVE.  We recall that only a couple of months ago we were reporting that Chinese gold imports in the first 10 months of 2010 totalled 209 tonnes, itself a 500% increase on the previous year.  It now seems that demand by individuals is reaching almost frightening levels.  Not only is jewellery demand seen as being up by 70% year on year, but investment demand (coins and bars as opposed to jewellery, which has been the main outlet for gold purchases in the past) is also coming on strongly from virtually nothing a couple of years ago to a WGC estimate of close on 180 tonnes in 2010.  If the pace of growth continues investment demand alone could reach as much as 300 tonnes in 2011!

If the Chinese Central Bank is absorbing domestic production, as many believe then total Chinese demand this year could soar past India's.  The potential is almost beyond belief.  Indeed Chinese offtake is more than matching any disposals from gold ETFs, and with the continuing justified worries about inflation in China the momentum is likely to continue regardless of the gold price elsewhere.

This area of demand is something which has only really come to life in the past two years, and it seems that many observers and analysts are just not feeding this information into their predictions.  As we've noted here beforehand this kind of demand level - particularly as it is not from a population which trades in and out on price, but holds its bullion and jewellery as insurance against really hard times - does tend to limit downside risk in the gold market.

But what of the Chinese Central Bank?  There is evidence that China is positioning itself to make the yuan at least a part of any new reserve currency package which might replace the still-declining U.S. dollar in global trade.  There is the strong suggestion that it needs to build its gold reserves as backing for this at least to levels approaching those of the biggest European Central Banks, which suggests a doubling of Chinese gold reserves at the very least in a relatively short space of time.  We know that China has been buying on gold price dips as various officials have confirmed this in the past, although we have no idea of the volumes involved.  Maybe the country will announce another revaluation of its reserves in the near future, even though it tends to be cagey about such announcements as it knows any significant increase will affect the global gold price and while it may be soaking up excess gold it still wants to buy it at what it may see as bargain prices!

Source: http://www.mineweb.com

Gold and silver: The states' new currency?

Why are so many state legislators beginning to call for issuance of a form of gold money?  The Constitution prohibits states from coining money but allows them to make “gold and silver Coin a Tender in Payment of Debts.” By prohibiting everything except “gold and silver Coin” the Constitution clearly considers gold and silver coinage to be legitimate, no matter who issues it.  States haven’t issued currency in any form for more than a hundred years. So why now? Disgust is probably the answer. Various state legislators are disgusted by the federal government’s promiscuous dollar-printing. Accordingly, legislators in a dozen states are contemplating legislation to issue gold or silver-based currencies, including Utah, South Carolina, Virginia and New Hampshire.  The transcript of the debates in the original Constitutional Convention shows that the attitude of the Founders toward paper money was one of contempt. One delegate, Roger Sherman, called for the insertion of an absolute prohibition against states issuing their own paper money.  Sherman’s argument prevailed, as the Founder’s decided that the states would not possess the power to “emit bills of credit, nor make any thing but gold and silver coin a tender in payment of debts” making these prohibitions absolute…  As for the federal government, the earliest drafts of the Constitution included language permitting the federal government to issue unbacked paper money. But this language would not survive the final draft.  Many of the Founders objected strongly to this power. The objections were summed up by delegate Oliver Ellsworth, who sought to “shut and bar the door against paper money.”  “Paper money can in no case be necessary,” Ellsworth argued, “The power [to issue it] may do harm, never good.”  Since most of the Founders agreed, the federal government was also denied the power to issue non-convertible paper money. The federal government mostly operated within these constraints – the main exception being the Civil War, when saving the Union took precedence over all other considerations.  But for most of American history, dollars have been convertible into gold or silver. It is a 20th century innovation to have non-convertible currency. In 1932, FDR denied US citizens the right to convert their dollars into gold by US citizens. Then, in 1971, Richard Nixon denied foreign central banks the right to convert their dollars into gold.  On August 15, 1971, Nixon declared:  I have directed Secretary Connally to suspend temporarily the convertibility of the dollar into gold… Now, what is this action – which is very technical – what does it mean for you?  Let me lay to rest the bugaboo of what is called “devaluation.”

If you want to buy a foreign car or take a trip abroad, market conditions may cause your dollar to buy slightly less. But if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today. (Emphasis supplied.)  President Nixon called the suspension “temporary,” but it has been anything but temporary…and the dollar has suffered as a result.  The dollar today is worth less than a quarter was worth in 1971. And yet, Washington has been curiously unresponsive to the suffering brought by Nixon’s failed promise. Why? Because Washington, itself, has been a primary beneficiary of monetary depreciation.  The federal government spent $15 billion from 1789-1900. Not $15 billion a year. $15 billion cumulatively. Uncle Sam will spend $10 billion per day in 2011. The federal government spends more every two days than it did altogether for more than America’s first century. Although these sums are not adjusted for inflation, they give a correct impression of the magnitude of the change from what our Founders set forth and our early statesmen delivered.  How does Washington get its hands on so much money? Three ways. Taxation, borrowing and printing dollars. The third mechanism is usually the easiest road…at least for a while. Almost no one complains about printing dollars because almost no one feels the resulting consequences directly or immediately.  The power to print money at whim is wrong. It is toxic to our personal and national wellbeing. And it is unconstitutional.  No wonder that legislators in twelve states are considering issuing their own gold-based currencies. By doing so, these states are challenging the federal abuse of an unconstitutional power – challenging the issuance of unhinged paper money.

Federal officials should take these state initiatives as a cue. Federal officials have sworn to preserve, protect and defend the Constitution of the United States. Let them take their oath seriously and restore the convertibility of dollars to gold.

Source: http://www.csmonitor.com

New Floor For Metal Prices To Be Established

February was a short month, and it’s been a wild ride. And it’s almost certainly going to be another wild month on the Libya front (not to mention Egypt, Tunisia, Iraq, Yemen, etc.). While we saw chaos erupt in virtually every Mideast country, the return of stock market volatility, oil spike, and several other things to get the pulse racing, February for gold was just a trailer.After a lull of almost two decade, when Gold started its recent bull run towards the tail end of the last decade when it was trading below $300 per ounce, since then, it has gone up five folds to over $1400 per ounce. And now, once again, we will witness the big show in March. While the price of gold is already appearing as if it is set up for another bull run, it is not from any sophisticated technical analysis. It is merely examining the spot gold price and observing the similarity of patterns that seems to be matching the gold price’s rise from the consolidations of last summer. While we have witnessed gold’s price gyrate up and down … just now, gold is headed for new highs.

If we look at the nature of the European Financial Stability Fund at stake, in the US, a major disappointment on jobs and an epic fight over the debt ceiling, its all going to make the budget stuff look like child’s play. And, the likelihood that the Mideast stuff will continue to spiral, and you’ve got the makings of what’s going to be an epic, it will be paramount for Gold and Silver. Note that the price is just now making a fourth attempt in as many months to penetrate the new high price set in as many months. Last summer saw a similar situation, where the price made about five attempts before finally setting a new high on or about September 1. This consolidation also lasted about four months. Then, when the price set a new high in September’s 2009, the “Gold Bull Run” was off and running for the fall. “The new floor for gold and silver is about to be established in the coming months” states Ron Fricke president of Regal Assets “September 2009 we saw gold break through the resistant level of $1000 an ounce and since this high it has not pulled back below $1000 an ounce, expect the same to happen shortly with both gold and silver prices”

Are there any other factors that may help an investor allay fears of a pending crash in the price of gold, rather than starting a new bull run? Just take a look at inflation of Paper Currencies. The markets interpret the Federal Open Market Commitees previous pronouncements as inflationary for paper currencies, is expected to continue until there are some indications of inflation being reined in. This currency inflation is a fundamental driver for the precious metals. Plus, there is a rising middle class as the world’s emerging markets continue to grow and gain parity with the world’s developed markets. The size of the world’s middle class growth is the largest in the Asian economies and of a scale that the world has never before seen. Asians have a particular affinity for the precious metals due to their history and culture of precious metals being a store of wealth. This buying by emerging middle classes provides a strong base of support for precious metals prices. And lastly, the peak Gold is coming due to higher costs and lower grades. Barrick Gold’s chief executive Aaron Regent already declared a state of “peak gold” in 2009. The thesis is that gold mining is difficult, and the challenges of increasing costs, lower gold grades, and difficult operating environments all coalesce to decrease gold production supply. This “peak gold” dynamic is ensuring that the new production supply of precious metals will be constrained in the future.

While some of the market’s reactions to the fundamental drivers affecting gold prices are currency inflation as the prime driver, buying from Asia will support the price during corrections. Future gold supply is constrained by peak gold. With all these factors affecting gold prices, is it any wonder that a significant rise is in store?

Finally, with massive withdrawals from savings banks already occurring in different areas of the world and being investing it in gold, just over the past week in Korea, a total of 490 billion won was withdrawn from 98 savings banks Monday, despite the financial regulator’s assurance that there will be no more shutdowns of such institutions. The withdrawals came after the FSC confirmed that it will avoid suspending operations of additional savings banks unless in an emergency, such as a bank run.

In many ways this is another example how global banking crisis will be affecting gold, since we are currently in the midst of, born out of faulty loans made in a global housing crisis. Another prime example of financial contagion, something we are seeing more and more of in our global economy—an economy that is deeply interconnected at this point; no event occurs in isolation, and a crisis in one part can spread to a crisis in other parts.

While fear might have been the catalyst to the gold record high last year, with weekly chaotic crisis hitting the global economy, gold will continue to be on the rise! In fact, it just hit a new five-week high. Demand for silver is becoming the second most precious commodity, moving up as fast as oil–oil is marching up again, now over a $100 a barrel. Agricultural commodities have gone ballistic in price over the past year and in some areas of the world, “gold fever” is absolutely exploding, says Peter Schiff, who has always been spot on, adds, buy silver now don’t wait for hyperinflation! Silver is going to explode to at least $100. Ultimately, if global political unrest is in the cards – and if new forms of government will emerge, perhaps in the form of new regional governments like the Eurozone, or non-state networks like Hezbollah and cyber-networks like Facebook, it would again strengthen the case for precious metals—as currencies introduced by non-state networks will eventually be tied to precious metals.

Source: http://goldcoinblogger.com

Is gold poised for breakout?

After a month or so in the doldrums after hitting a record high in December, the Middle East/North Africa (MENA) unrest has launched the gold price towards yet new highs, and at the time of writing the yellow metal was trading just above $1,430 an ounce in Europe.

In OTC trading in the U.S. yesterday a new all-time high had been breached temporarily.

Some observers, notably Julian Phillips of Gold Forecaster who is a regular writer on Mineweb, sees the latest move in the gold price as being a long-awaited breakout and now expects to see a move to new highs between $1,500 and $2,000 this year with higher prices thereafter. 

Other pro-gold commentators will be even more bullish, but there will also be plenty of naysayers out there They just cannot recognise that the movement in the gold price defies what is nowadays deemed as normal investment logic because gold is hard-wired into the psyche of a large part of the world's population as the perennial wealth store and a hedge against bad times.  When this coincides with external events like the MENA ‘uprisings' the pressure pushing the gold price up can be extremely strong.

Gold demand is currently being skewed by burgeoning offtake in the East - notably in China and India and other South and Far Eastern nations - where a sea change has been taking place in the wealth and investment potential of the population.  This has been  brought on by enormous advances in GDP and a corresponding growth in the numbers of people entering the potential gold-buying market, and in their disposable incomes.

Probably nowhere is this being seen to more effect than China.  Anecdotal reports indicated a tremendous surge in gold buying ahead of the Chinese New Year in early February - and by all accounts this is continuing after the New Year as the population is becoming increasingly nervous about inflation, which Chinese economists, seriously worried about the ‘export' effects on prices of the U.S. Quantitative Easing programs, view as Bernanke-inspired.  There are reports of long lines developing again at shopping outlets selling gold and gold jewellery with demand running hugely ahead of the same time last year - a year in which Chinese demand reached record levels.

While China seems thus to be underpinning the gold price with ever growing frantic demand there is evidence, though, that other Asian markets are a little more cautious on the higher prices - perhaps in part because for the most part they are more established gold markets while China is much more of a new player.  Even so, Asian gold buyers do have a penchant for hanging on to their gold and only selling in real necessity - it is not primarily a profit-taking trading market as seen in much of the West.

So at the moment we have perhaps a higher proportion of Western investors trading in and out of gold, hence its volatility and the limitations which tend to mitigate highs as profit taking comes in - although it does seem that the really big investors, like Soros and Paulson, are largely hanging on to their precious metals and not liquidating even a part of their holdings on the current high prices.  Thus we have seen holdings in the SPDR Gold Trust ETF continuing to fall, although there is evidence in the past few days that the rate of decline has been easing and maybe we'll see a reversal in the next week or so dependent on global events.  

The advances and retreats in precious metals prices in recent months have largely been on the perceptions of how well the U.S. and European economies are recovering from recession.  As things are seen to improve the safe-haven appeal falls away and prices dip, and also better investment opportunities are seen elsewhere, although recent stock market weaknesses may mean this is a false perception.  

But when adverse economic figures appear the reverse happens and interest returns to precious metals.  Now, the current MENA troubles are putting serious pressure on the oil price and high oil prices are seen as potentially depressing the Western economies, hence the gold price surge.  Should things quieten down in the MENA countries then gold and silver could retreat again.  If the unrest spreads - notably to Saudi Arabia - then all bets are off and the sky could be the limit.
Source: http://www.mineweb.com