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'One-Way Traffic' to Buy Gold Post-Fed in Asia Fades as Swiss Rates Go Negative, Indian Gold Premiums Too

BUY GOLD bids faded in late London trade Thursday, taking spot prices down through $1200 and back to $1194 per ounce – the level seen before the US Fed changed key wording in Wednesday's statement on when Dollar interest rates might rise.   Instead of waiting a "considerable time", the Fed will now be "patient" before hiking rates from the 0% imposed since the start of 2009.   Today the Swiss National Bank cut the interest rate it pays on commercial bank deposits at the central bank to a target of minus 0.25% per year, blaming capital flight from Russia amid the collapse of the Ruble.   World stock market extended Wednesday's strong rise on Wall Street except in China, where equities held flat for the day after new data said house prices fell again nationwide in November.   "The Fed did a good job of distancing themselves from the 'considerable' guidance," says a note from Dutch bank ING, "without upsetting equity markets."   "The precious metals staged a recovery in Asia today," say traders at Swiss refining and finance group MKS.   "It was one-way traffic" with Chinese traders in particular buying gold up $1200 per ounce after an initial drop after the Fed statement to $1188.   New Swiss export data today showed Indian wholesalers buying 77 tonnes of gold last month, some 3% more than October according to investment bank UBS on "strong demand during Diwali season and some pre-emptive purchases on expectations that import rules might be tightened."   But instead, India suddenly eased its anti-import rules at the end of November, "So dealers imported more than their requirement," says MNC Bullion director Daman Prakash Rathod in Chennai.   "They are now struggling to find buyers" in the absence of wedding or festival days on the Hindu calendar, Rathod says, with local prices dropping to $2 per ounce below London quotes as retail quotes to buy gold fall, taking the premium negative for the first time in 5 months.   Silver prices also eased back from an Asian rally in London trade Thursday, retreating below $16 per ounce for the third time since hitting this 5-year low at the start of November.   The Russian Ruble meantime gave back all of its overnight rally after President Putin's annual press conference in Moscow, but held 27% above Tuesday's sudden new all-time low near 80 per Dollar.   The Central Bank of Russia has been the world's heaviest sovereign buyer of gold in 2014, taking its reserves into the top 5 at more than 1,170 tonnes.

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Gold Prices Flat Below $1200 Ahead of US Fed Decision on Zero Rate Promise, "Expect Volatility" as Russia Buoys Ruble with FX Intervention

GOLD PRICES traded flat in London on Wednesday, briefly spiking above $1200 per ounce as crude oil prices steadied, and the Russian Ruble rallied from yesterday's 20% plunge, ahead of the US Fed's latest policy statement.   With Russian media heavily trailing tomorrow's scheduled press conference from President Putin, Moscow joined the Opec oil cartel nations in saying it won't cut production in 2015, despite crude's plunge to 5-year lows.   The Ruble recovered to 64 per Dollar from new record lows overnight at 71 after the Central Bank of Russia announced new sales of Euros and Dollars from its foreign reserves to support its currency, but the government refrained from imposing exchange controls to stem capital flight.   US Treasury bonds meantime edged down as traders looked to today's new policy statement from the Federal Reserve, widely expected to cut the key "considerable time" promise on keeping rates at zero.   "Expect a volatile session ahead," said one gold trading desk, "particularly if we see the Fed change some of their language in the accompanying policy statement."   Low interest rates, says London-HQ'ed consultancy Thomson Reuters GFMS, are helping deter gold miner hedging, because the gold market currently lacks any "premium" on forward sales over and above current spot prices.   "A break below $1192/86," said technical analysis from French bank Societe Generale, "would accelerate the down move as this would confirm a Head and Shoulders pattern."   "We suspect," says Karen Jones in her weekly technicals for Germany's Commerzbank, "that the market is attempting to base down at the $1146/1132 recent lows.   "However, gold has not quite done enough to confirm."   Forecasting a gentle rally to $1280 by end-2015, Australian bank ANZ says "physical gold demand in China and India were held back in 2014 amid high stocks and import controls respectively.   "Both these shackles have been removed, putting demand on a solid footing as we head into 2015."   New research from Australian bank Macquarie meantime shows gold has the weakest correlation with crude oil of all the major tradable metals, and has been less correlated since 2010 than the US stock market on a weekly basis.   The ratio of gold to oil prices, adds London consultancy Metals Focus, is now at the highest level since the late 1990s at 20 barrels per one ounce.

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Gold Price Jumps 2% vs. Falling Dollar as Oil & Russian Ruble Crash, "No Change Likely" to US Fed's Zero-Rate Vow

GOLD PRICES surged against a fast-falling US Dollar late-morning Tuesday in London, rising back above $1200 per ounce as crude oil sank, the Russian Ruble fell 20% to new all-time lows, and traders slashed their bets on any change from the Federal Reserve at its policy meeting tomorrow.   Monday had seen the Dollar price record gold's "sharpest fall in a day" since 2 December 2013 according to Reuters.   But as Brent crude oil this morning joined US contracts below $60 per barrel for the first time in 5 years – and silver held more than 4% below last week's finish – gold jumped 2.1% inside 1 hour, briefly touching Friday's 7-week closing high.   The Moscow stock market meantime dropped more than 17% for the day as the Ruble sank from 60 to 80 per Dollar.   Already hiking interest rates today from 10.5% to 17% but to no effect, the Central Bank of Russia called the situation "critical" and vowed "further action".   Norway's Krone also sank as oil fell, dropping 5% to the Dollar, while Bloomberg's GCC index of Middle Eastern and North African stock markets also fell 5%.   Outside the so-called "commodity currencies" however, the Dollar itself fell hard ahead of Wednesday's decision from the US Federal Reserve, giving back its last month of gains vs. both the Euro and Yen.   "We have a feeling the Fed will not be removing the key phrase 'a considerable period' from its communique," says a note from US brokers INTL FCStone, pointing to the US central bank's continued promise of zero interest rates.   "If correct, we should see the Dollar weaken from here...So we likely would want to stay long gold going into [Wednesday's] release, perilous as the short-term looks for the moment."   Ten-year US Treasury yields fell hard near two-month lows as bond prices rose Tuesday.   The Euro today jumped to its best level against the US currency since mid-November, adding 3 cents $1.2550 from last week's new 2-year lows.   That capped gold in Euro terms below €970 per ounce.   The Japanese Yen rose 5% from early December's fresh 7-year lows.   Yen gold prices held Tuesday below ¥4,540 per gram, some 4.3% beneath last Wednesday's 19-month high.   "Both Tokyo and Shanghai took advantage [overnight] of the decreased gold price," says one Asian trading desk, "and we saw modest bids in the market from both centers."   Premiums on Shanghai's main gold contract fell 1.7% in Yuan terms Tuesday. Converted to Dollars, however, newer contracts for high-grade kilobars in the city's international "free trade zone" rose to $3.70 per ounce above London prices, well above the average level since September's launch.   As New York's stock markets prepared to open 0.5% lower on Tuesday, gold priced in Dollars held around $1210 per ounce, some 1.6% above the overnight 1-week low.

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Gold Price Drops 1.3% Ahead of US Fed Decision on "Zero Rate Promise", Still "Holding Well" Above $1200 as Crude Oil Hits Russian Ruble Again

GOLD PRICES slipped near 1-week lows at $1207 per ounce in London trade Monday, dropping 1.3% from the highest Friday finish in 7 weeks ahead of this week's key US Federal Reserve announcement.   Asian and European stock markets slipped overall once again, but European Brent crude prices rallied from last week's new 5-year lows while US oil slipped further below $60 per barrel.   Major government bond prices fell hard, pushing longer-term yields higher, on what Bloomberg calls "speculation" that the US Fed will drop its commitment to keeping Dollar rates at zero "for a considerable time" when it announces policy on Wednesday.   "Despite tumbling crude oil prices," says South Africa's Rand Refinery in a note, "the price of gold has held rather well and remains above the $1200 an ounce level."   But also looking at Dollar gold prices, "A retracement towards $1168 looks plausible," says the technical analysis team at French investment bank and London bullion market maker Societe Generale.   "Only a decisive break above $1240 will mean an extension in the recovery."   "News of a terrorist siege/hostage situation in a Sydney cafe had little impact on markets today," says a note from Swiss refining group MKS's Asian trading desk.   Looking at upcoming data releases, "Nothing will be of any particular consequence ahead of the [US Fed]meeting this week," says broker Marex Spectron's London bullion head David Govett.   Silver prices twice fell on Monday to rally off $16.80 per ounce, a new 5-year low when first reached in October.   The Russian Ruble fell to 60 per Dollar for the first time, down by one-third from September.   "Potentially bullish for gold," says a note from US brokers INTL FCStone, "there might be mounting credit issues associated with Dollar debt raised by Russian companies, many of them in the energy space."   Shanghai gold prices held flat in Yuan terms by the close today, extending their premium over London quotes to $1.90 per ounce.   Indicative of Chinese wholesale demand for importing metal, the last 3 months' average premium to London gold is nearer $2.40 per ounce.   Shanghai Securities News reports that jewelry sales in the major city of Shenzen have dropped 40-50% in the last year.   Leading jewelry manufacturer and retailer Chow Tai Fook last month reported a 41% drop in half-yearly gold sales.   With the Chinese New Year set to mark the peak of household gold demand in mid-February 2015, latest Chinese manufacturing activity – a key report for traders watching the growth rate of the world's second largest economy, and its No.1 gold producer and consumer – is due for release with HSBC bank's PMI data overnight.

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Gold Price "Remarkably Stable" in Face of Crude Oil Crash, Stock Market Drop, New Euro Crisis and 8-Year High in US Consumer Confidence

GOLD PRICE gains of 2.9% for the week were trimmed in London trade Friday, with the metal slipping through $1220 per ounce after stronger-than-forecast US consumer confidence data.   The Reuters/Michigan index rose to its highest level since January 2007 – before the financial crisis hit world credit markets – with inflation expectations also turning higher.   But despite the US Federal Reserve voting on interest-rate policy next week, the US Dollar was little moved on the FX market as Western stock markets fell sharply against a fresh plunge to new 5-year lows in crude oil, now trading below $60 per barrel on the WTI benchmark.   The Euro continued to trade within half-a-cent of this month's Dollar highs at $1.25.   Euro gold prices dropped below €980 per ounce, cutting this week's gain to just 0.8%.   "In the face of this week's growing uncertainty, the gold price has been remarkably stationary," says a note from Deutsche Bank, "even versus the Euro   "Market protagonists appear unwilling to use gold as a hedge against an ECB asset-purchase program, a sovereign default, or a Eurozone break-up, at least not if this involves holding a long position over the year-end."   "Rather looks," says a London trading desk, "as if the year will end in a blaze of volatility rather than with a whimper," pointing to "continued geopolitical tensions, oil price destruction, Dollar strength and – very possibly – overstretched positioning in many assets.   "All this could be wound up another notch if the Fed tightens its statement next Wednesday."   For now, says a technical trading note, "Resistance is at $1236, the [downwards] trendline from Oct 2012."   "We maintain a focus on the 100-day moving average," says bullion bank Scotia Mocatta's technical team, "an important level of near term resistance given the recent attempt and failure to close above it."   "Like all commodities," says UK finance professionals site CityWire, quoting  Michael Turner of the $435 million Aberdeen Multi-Asset fund, "gold can be volatile.   "But if deflation prevails in Europe, bringing into question the soundness of the Euro once again, then gold may represent an appealing store of value.   "Over the long term, it has proved a useful diversifying component of the portfolio, particularly in times of market stress."   Silver demand meantime will outstrip new supply by some 11 million ounces (340 tonnes) in 2015, according to a new forecast from global bank and London market-maker HSBC.   In an annual market of some 1 billion ounces (31,100 tonnes), this year will have seen a surplus HSBC says of some 3 million ounces (93 tonnes).   Silver today tracked gold prices, moving sideways above $17 per ounce to head for a 4.7% weekly gain.

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