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Dollar Buy Gold Prices Erase 2015 Gain as Eurogroup Gives June Ultimatum to Athens

BUY GOLD prices fell hard in London trade Friday, following silver down to 5-week lows as world stock markets extended their run of new record highs following yesterday's break by New York's Nasdaq index of its March 2000 Tech Bubble peak.   Eurozone investors wanting to buy gold saw prices drop harder – despite fresh wrangling over Greece's bail-out loans from its Euro partners – as the single currency rose to 4-week highs against the Dollar.   Commodity prices meantime edged up towards 2015's starting level on the S&P GSCI index, while 10-year German Bund yields held at 0.15%, almost twice last week's new all-time low.   After seeing bids to buy gold outweigh offers to sell for a third time running at the LBMA Gold Price Friday morning, the 3pm run of this newly electronic wholesale benchmark – launched in March to replace the century-old Gold Fixing – met supply 40% greater than demand at $1183 per ounce.   Spot gold prices, quoted by major dealers to their individual counterparties, then fell to average $1178 inside 5 minutes, trading 2.1% beneath last Friday's finish and erasing the last of 2015's earlier 10% gain.   "A move below $1180," says a technical analysis from Swiss bank and bullion market-maker UBS, "open[s] further lows towards...the key support at $1142.94, the low of March 17."   "Physical interest from Asia ha[d] been supportive of gold this week," said a note earlier from the commodities team at Germany's Commerzbank.   But on Friday "price action within the precious complex during Asia was generally non-existent," counters Swiss refining and finance group MKS, reporting "little noticeable interest coming out of China."   Technically, Dollar gold prices had been "stuck in a range-bound configuration," says Societe Generale chartist Stephanie Aymes, "remaining in no-man’s land ahead of a [US Fed] rate decision" according to Standard Chartered analyst Nicholas Snowdon.   However, with US Treasury bond yields ticking lower again Friday, "Broad US economy returns over the cost of capital are in structural and cyclical decline," says a separate note from UBS commodities analysts, while "credit appetite is deteriorating.   "That will lead to a trend widening of spreads, deteriorating credit availability and uptake, slowing growth, and a new round of Fed reflation" – conditions UBS says should be positive for demand to buy gold as well as for gold-mining shares.   Meantime in Riga, Latvia, a meeting of Eurogroup politicians to discuss Greece's ongoing bail-out loans from 2010 ended with Athens' finance minister Yaris Varoufakis saying his left-wing Syriza government is "willing to compromise" on imposing new economic reforms in return for extended terms.   Eurogroup chairman Jeroen Dijsselbloem told reporters "a comprehensive and detailed list of reforms is needed" to release the last €7.2 billion in bail-out loans – which will not be offered beyond June.

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Dollar Gold Price Rallies Again from 2013 Crash Low as Commodities Defy Weak PMI & US Data

DOLLAR GOLD prices rallied again on Thursday from $1184 per ounce – the crash low hit in 2013 – as Western stock markets slipped and government bond prices rose after weaker than expected manufacturing from Japan, China and the Eurozone.   Industrial and energy commodities rose however, with copper trading midway between last month's 2015 peak and January's 6-year low.   Euro gold prices meantime followed Sterling gold down towards 1-month lows as the single currency ticked higher versus the Dollar following news of a surprise rise in US jobless benefits claims last week.   Separate data showed a sharp drop in sales of new US homes last month, plus lower manufacturing activity growth in April on the Markit PMI survey.   "A positive turnaround in US economic data is key," reckons a note from Australia bank ANZ, "supporting a higher US Dollar and lower gold price.   "Adequate physical inventories in China should [also] mean import demand underperforms...Onshore premiums in the two key gold markets of China and India indicate that there is no shortage of gold in the domestic markets."   Trading in Shanghai's main domestic gold contract today rose to the highest level since the start of April as Yuan prices fell.   Dollar gold quotes in London stood lower still however, meaning that the incentive for Chinese wholesalers to import metal doubled to just over $2 per ounce.   Premiums on Shanghai's international gold contract, open to foreign institutions and traders with Yuan held offshore, rose to $2.45 per ounce but volumes eased back.   "Gold [fell] to its lowest level since late March," notes a technical analysis from Canada's Scotia Mocatta, "below the 50 day MA [moving average].   "We await confirmation with a focus on a downside break of the recent range, looking for a test below $1180.   If the $1180-84 zone is breached, says Swiss refining and finance group MKS's trading desk, it "will energise the bears and trip stops" – meaning orders to sell – "which are growing around this level."   Swiss refiners imported growing quantities of metal sold from investor holding in London last month, Bloomberg reports, before shipping smaller kilobar products onto Asian markets and "almost doubling" flows to China from February.   "The big investor outflows from the UK via Switzerland to China and India," says Australian bank Macquarie's analyst Matthew Turner, "is a continuation of the flow of metal from West to East" most clearly marked during the gold price crash of 2013.   "Short-term, it is a sign of weakness, not of strength in the market."

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Gold Price Hits Lowest LBMA Price in April as Greek Reforms Delayed, Emergency ECB Loans Extended

GOLD FELL to the lowest Dollar price in a week lows and hit 1-month lows against a rising British Pound mid-afternoon Wednesday in London, as Western stock markets slipped amid news of fresh delays to a resolution of the Greek debt crisis.   Athens will not submit fresh reform proposals to its Eurozone partners – needed to unlock €7 billion of bail-out loans – at Friday's summit of finance ministers as expected. But "the clock is ticking," Euro working group head Thomas Wieser assured Austria's ORF news broadcaster late Tuesday.   "Over the course of May [an agreement] must finally be reached", some 5 years after the Eurozone first made 'bail-out' loans to Athens.   As the single currency Euro fell on the FX market Wednesday, the LBMA Gold Price auction saw heavy offers to sell bullion at the 3pm opening price of $1197 per ounce, forcing a price cuts to $1189.25 – the lowest benchmark price since 1st April – before demand rose 4-fold to better balance that supply.   Silver extended the gold price drop, hitting 5-week lows against the Dollar at $15.70 per ounce.   US and UK government bond prices both fell, nudging interest rates higher, but German and French yields pushed lower to new record territory as Greece's stock market dropped to 3-year lows and Athens' market borrowing costs rose towards 14%.   German daily Handelsblatt today said the European Central Bank has raised the ceiling on its Emergency Liquidity Assistance to Greek banks, extending ELA by another €1.5 billion to €75.5bn – a move unreported by the ECB itself, and not mentioned by board member Benoît Cœuré in an interview with Greece's Kathimerini today.   "The Greek banking system currently receives around €110 billion of central bank liquidity," Cœuré tells the paper, "more than double the level of last December and 61% of Greek GDP, the highest level of any Euro area country."   According to the ECB's website, ELA is extended to "a solvent financial institution facing temporary liquidity problems."   Cash deposits at Greek banks have fallen to 10-year lows, shrinking by 15% in the five months to March.   Further ahead, reckons US investment bank Morgan Stanley, "Negative rates" on Eurozone government bonds "will continue to drive flow into US credit, supporting both the house view of ongoing Dollar strength and our unchanged generally subdued gold price outlook."   But for now, ICBC Standard Bank adds, "Gold ETF holdings continue to rise, with the spectre of a Greek exit from the Eurozone gaining the upper hand for the moment compared to the timing of higher US interest rates."   The giant SPDR Gold Trust (NYSEArca:GLD) yesterday added another 3 tonnes of gold to back its shares, expanding for the third time in a week to reach 742 tonnes after losing 5% from February's  6-month high of 773 tonnes.

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What to lift Gold to $1,300 an ounce?

The combination of U.S. economic growth concerns along with the rising risk that Greece will default on its debt obligations in the coming months, should see gold rally to highs near $1,300 an ounce sometime in Q2-2015 -- monetary policy trends, safe-haven buying should prompt specs to cover short exposure and build new longs, with technical positioning providing the path to the higher target.

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Gold Prices 'Stuck in Dollars' Despite 100% Grexit Risk, Holds 22% Uptrend in Euros as EU's Juncker Demands 'Quick Conclusion' 4 Years On

GOLD PRICES fell again from a rally back to $1200 per ounce in London Tuesday lunchtime, also retreating from 3-session highs against the Euro as Greek banking shares sank with Athens' bond prices on fresh fears of a state default or 'Grexit' from the single currency zone.   "Gold remains stuck in a narrow range even as the market balances the cranking up of Greek tensions," says one London bullion bank's commodities team in a note.   But with Greece "repetitively in the headlines," adds the trading desk at ICBC Standard Bank today, "Euro gold [is] holding on to its upward trend" – now taking the Euro gold price 22% higher from end-November's lows.   Gold priced in Dollars "has had ample opportunity to rally," says another London broker, pointing to China's easier monetary policy and fresh Russian reserves buying.   RBC Bank in Canada said overnight it expects further demand from Moscow to help "support the gold price" in 2015 "given the geo-political and Ruble liquidity risks the country is facing."    Against such factors however, "The Dollar and stock market strength remain the main driver in the precious metals markets," says the London broker.   "Global risk appetite is still high," agrees consultancy Capital Economics, also trying to explain in a press release why gold "isn't doing better despite 'Grexit' risks...   "The markets still appear to be anticipating some sort of last-minute deal...[and] even if Greece does default, it might make it easier for Greece to remain a member of the single currency, by reducing the need for austerity."   But weighing most against gold prices, "There is a widespread perception (mistaken, in our view) that Greece is a 'special case' and that other members are very unlikely to follow it out of the door."   Speaking to journalists in Vienna today ahead of Friday's Eurogroup meeting of finance ministers, "The intensity of talks [with Athens' left-wing Syriza government] has increased in the past four or five days," said European Commission president Jean-Claude Juncker.   "But [it] is not yet at the maturity needed to be able to reach a quick conclusion."   Athens first called for talks to discuss bail-out loans 4 years ago last week, two months after the true extent of its debt crisis was revealed.   "Greece has a humanitarian crisis," Juncker said today, "so it's out of the question to abandon Greece.   "It is also out of the question to support Greece at any price."   The market implied probability of Grexit now stands at 100% according to analysts Fathom Consulting – a level seen throughout 2011 and 2012 on its metrics.   The markets gave zero probability to a Greek exit from the Eurozone as recently as September.   "While options [prices] remain near recent lows" in gold derivatives, says ICBC Standard Bank, "the premium for puts is slowly chipping away" – signalling less demand for the right to sell gold short and so meaning the "market is similarly looking for move higher."   Silver meantime tracked gold prices higher and then lower on Tuesday, falling below $16 per ounce for the second day running, a level last seen 5 weeks ago.   Silver's biggest ETF product, the iShares Silver Trust (NYSEArca:SLV) yesterday saw its metal backing swell by 0.4% to 10,150 tonnes, the largest level in a month.

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