Malaysia Gold Investment

Since tuesday was a very busy day for gold, with the yellow metal bursting through $1,300. The triggering of stops saw the metal continue to head upwards, closing the day at $1,309. Gold is taking a breather so far today however, trading sideways and consolidating around Tuesday’s closing levels ahead of US trade. With little in the way of macroeconomic data this afternoon, gold will likely continue to consolidate and track the dollar. Deepavali will be on 5 Nov 2010 and usually month before that India will buy in a lot of gold, however due to the price is high so the buying will be less. Gold price will be supported well due to high demand of gold in 4Q2010.

The euro’s woes continue to be drag on precious metals, while a surge in Ireland’s CDS also points to the uncertainty over the strength of some Eurozone nations. Interestingly however, the impact on the currency markets has been fairly short lived, and muted, with the dollar weakening again heading into the afternoon. The market certainly appears to have become increasingly bored with the Eurozone story, particularly with the potential for QE2 in the US on the horizon. As such, the markets appear to have established a degree of immunity towards these sorts of headlines for the time being, with gold failing to benefit as much from its “safe haven” status as it has done in the past. That said, gold and silver have nevertheless benefited from buying into dips, with that activity helping to support prices. So while gold already reach at 1,300, we remain bullish and maintain this level as a short-term target.

Gold and silver continued to advance to record levels at the end of last week, as a weaker dollar and lingering concerns over the global economic recovery encouraged investors to seek the safety of precious metals. With the dollar regaining some ground against the euro, gold and silver have since lost support. That said, with the current euro weakness largely attributable to the resurfacing of concerns over the stability of Eurozone banks, these fears may well see demand for precious metals continue to pick up heading into the week. Of interest, Central Bank gold sales have plunged, with the Year-ending September 14th seeing gold sales from the IMF and Eurozone banks - under the Central Bank Gold Agreement falling 40% to 94.5 mt. Eurozone sales for the year fell by 96% y-oy to only 6.2 tonnes, with IMF sales making up the balance at 88.3 tonnes. While falling sales are nothing new, the figures are interesting nevertheless with the lack of sales marking a change in the central bank’s mi...

As anticipated, gold has met resistance on its approach to our target of $1,300, with gold unable to move past the $1,296 level as physical selling weighed down on prices. Gold has remained fairly steady, trading around yesterday’s closing levels in spite of a stronger dollar. The market is perhaps holding fire ahead of US trade and this afternoon’s US data, with poor suite of figures perhaps seeing the dollar weaken further and providing the momentum to see gold push past $1,296 and bring $1,300 within reach. Gold support is at $1,286 and $1,281. Resistance is at $1,296 and $1,301.

Precious metals, most notably gold and silver, rallied after the Fed stated its willingness to expand quantitative easing measures to support the US economy. The FOMC said it is “prepared to provide additional accommodation if needed to support the economic recovery” citing a rising, yet moderating pace, of business investment, a reluctance of business to add to payrolls, a depressed housing market and a modest pace of economic recovery. Given gold’s close and positive relationship with liquidity and associated inflationary fears, the announcement saw gold rally in NY trade yesterday. In addition, the fall in the dollar, prompted by fears of currency devaluation, has provided an added impetus this morning. Yesterday’s moves saw gold finally push through the $1,285 resistance level, bringing our target of $1,300 within reach. Standing in its way however has been a significant drop in physical buying, with the latest rally seeing Asianbased physical selling emerge overnight. Gold support...

Friday’s disappointing US data flow, gave the gold bulls another reason to buy the metal, amid concerns that the US economy’s recovery might be faltering. The University of Michigan’s index of consumer confidence fell to 66.6 in September compared to consensus expectations of a rise to 70.0 from the previous month’s 68.9. A weaker dollar has added to gold’s upward momentum this morning, although the $1,285 level continues to pose resistance. As highlighted last week, this resistance stems largely from the physical market and could keep gold range bound below $1,285 for a while. Gold support is at $1,275 and $1,270. Resistance is at $1,285 and $1,290.

While gold is being met with strong resistance on approach of $1,285, we believe it is a matter of time before gold moves higher. There is current resistance from the gold physical market to gold’s quick move from $1,250 to $1,280. The resistance from the physical market (with scrap also coming to the market), may see gold consolidating in the $1,270—$1,280 range for a while. Ultimately we see gold heading towards our target of $1,300 within the coming weeks. We believe, should gold breach $1,300, the metal could rally higher towards $1,320 on the back of technical buying. Gold support is at $1,270 and $1,265. Resistance is at $1,285 and $1,295.

Gold is still pushing higher on good support this morning, as US treasury yields remain around the 2.75% level and implied real interest rates below 1%. The futures market also expects the Fed funds rate to remain low, well into 2011. The futures market puts the probability of an unchanged Fed Funds rate by Aug'11 at 66%. One month ago the futures market assigned a probability of 54.6% to unchanged rates until Aug'11. Two months ago this probability was only seen as 25.4%. Markets expectations of a rate increase are constantly pushed further into the future. This has happened consistently since the start of 2009 and we believe it will happen again. Low interest rates are bullish for gold. With the latest push in gold, physical demand has dried up. This pattern has repeated itself in the past, with demand falling away when the gold price rises fast. However, we expect demand to return should gold settle in a range for a few days. Gold support is at $1,265 and $1,260. Resistance ...

We’ve held the view that gold would breach $1,300 in Q4:10 since May (see Commodities Daily of 12 May and Commodities Insight of 11 Aug’10). At that time, our view was based on investment demand and an expectation that physical gold demand would pick up in Q4:10. Since August, gold demand from the physical market has been rising as seasonal jewellery demand picked up. Apart from rising global liquidity and low real interest rates, one of the main factors driving our view for gold, and the timing thereof, has always been the behavior in the physical gold market. When the gold price hit new highs on 21 June, resistance from the physical market was strong. Refer to our Standard Bank Gold Physical Flow Index (GFPI) in the adjacent figure. Our index tracks physical flows in the gold market. An index value greater than zero confirms buying activity in the physical market; the higher the value, the greater the buying momentum. An index value less than zero confirms selling in the physical mar...

Gold continues to find support on price dips towards $1,240. Our view remains unchanged - dips are likely to be bought on the back of increased seasonal demand, low real interest rates and continued growth of global liquidity. After a slight pull-back in physical demand when gold moved towards $1,260 last week (and even some scrap selling), physical demand is positive again and we believe supporting the metal. Gold support is at $1,240 and $1,237. Resistance is at $1,254 and $1,260.

Despite positive real economic news, especially out of China over the weekend, we maintain gold will push higher in Q4:10. While the 10-year government bond yield in the US continues to move higher (from very low levels), the yield on the US inflation-linked government bond remains almost unchanged at around 1%, showing that the market expects real interest rates to remain low in the US. Low real interest rates are bullish gold. The latest CFTC data indicates speculative interest is rising in precious metals. We noted in the Focus section that gold’s net speculative position is in line with the average level seen over the past two years when looking at the speculative length as a percentage of open interest (OI). Platinum doesn’t look overextended using this measure (although silver and palladium’s net speculative positions are starting to look very high): NYMEX Platinum’s net speculative length stands at 50% of OI, well below the highs of around 64% registered in May this year, and in...

Investor look to developments in the US bond market — the US 10-year government bond (UST) yield appears to have broken out of the downward channel it has traded in since the start of April. Currently the 10y UST yield is at 2.75%. We also look at the US 10y inflation-linked bond (TII) yield which has remained almost unchanged at 1% over the past few weeks, indicating the market expects US real yields to remain low for a long time. In the long-run a low real interest rate is bullish, especially for gold. A rising nominal real yield (from the 10y UST) and a constant real yield (from the 10y TII) implies higher inflation expectations (breakeven inflation) in the US. Current breakeven inflation in the US is still low, but it has reversed it’s downwards trend and currently stands at 1.75% (after bottoming at 1.45% mid-August). This is important for precious metals, not necessarily because we expect inflation to run rampant and push precious metal prices higher, but it signals a move away f...

Gold is pushing towards its all time highs of $1,265. Our target for gold remains $1,300 in Q4:10. We see the long-term causal fundamental drivers for investment demand in gold as liquidity and long-term real interest rates. Both support a higher gold price (refer to Commodities Insight dated 11 Aug’10). Global liquidity is ample and real interest rates are low; as a result, investment demand for gold is likely to remain in place. Gold’s relationship with liquidity is confirmed visually (refer to figure) as well as empirically. We measure global liquidity as the US Fed balance sheet plus global foreign reserves holdings excluding gold. YTD, our measure of global liquidity is up 10%. The gold price is up 13% YTD. As ETFs are utilised by institutional and retail investors, they are an important vehicle for liquidity and low interest rates to be channelled into gold demand. Given robust global liquidity, it is not surprising that total ETF holdings now stand at around 2,030 tonnes. Since ...

Gold and silver were pushed lower during afternoon trade yesterday, as increased risk appetite emerged. This morning has seen renewed interest across the precious metals complex however, with a weaker dollar helping lend support to prices. Meanwhile, unease ahead of to night non-farm payrolls data is picking up, which could also prompt some additional safe haven buying. Gold support is at $1,240 and $1,235. Resistance is at $1,255 and $1,265. Silver support is at $19.25 and $19.15, resistance is at $19.50 and $19.65.

It is a data-heavy week, with ISM/PMI manufacturing indices for all major economies due for release. US employment data (ADP data on Wednesday and NFP data on Friday) could also keep the market nervous. US equities remain under pressure, while US treasuries continue to rally (the 10y US treasury yield now stands at 2.50%, after touching 4% at the start of May). Both US equities and US bonds signal bearish sentiment towards especially the US economy. We note that the strength in US treasuries is supported by expectations of a possible bond purchases by the US Fed and view these expectations of further monetary easing as positive for gold. In the physical market, we continue to see gold buying, although it has slowed with the gold price above $1,230. With gold closer to $1,240 there also appear to be some gold scrap selling coming through. Gold support is at $1,234 and $1,231. Resistance is at $1,239 and $1,247.