Malaysia Gold Investment

The gold price advanced Wednesday morning, rising $7.70 at $1,509 per ounce after the Greek Parliament’s passed sweeping austerity measures. The price of gold held its gains after politicians in Greece passed a $112 billion austerity package that paves the way for the next round of bailout funds from the European Union and the International Monetary Fund. Gold prices have recaptured the $1,510 level in recent days amid a broad-based rally in global financial markets. After another deflation scare – one that sent the ten-year U.S. Treasury yield to 2.9% – stocks and commodities have regained their footing. Despite the recent rally in the gold price, the Global Precious Metals team at TD Securities remains cautious on the yellow metal over the short-term, noting that “Gold and silver have been consolidating recent losses in a fairly narrow range and it’s difficult to see a rally eventuating at this point.”

The gold price climbed $4.00 to $1,502 per ounce Tuesday amid broad-based strength in the commodity complex. The price of gold has fallen for three consecutive sessions in dropping below the psychologically-important $1,500 per ounce level. Silver rebounded alongside gold, gaining over 1% to $34.01 per ounce. Crude oil and copper rose 1.6% and 0.8% to $$92.09 per barrel and $4.10 per pound, respectively. The gold price began the week with a modest loss, falling $7.27, or 0.5%, to $1,495.37 per ounce. The sell-off in the price of gold developed as indications that a widespread European sovereign debt crisis could be avoided. Silver dropped alongside the gold price, sinking $0.76, or 2.2%, to $33.55 per ounce. While the gold price moved lower, gold equities held up. The AMEX Gold Bugs Index (HUI) hovered near unchanged, before settling fractionally lower at 500.77. Barrick Gold (ABX), the world’s largest gold miner, advanced 0.3% to $43.16 per share, while Goldcorp (GG) dipped 0.2% to

Gold enter the last few days of the second quarter limping after last week’s heavy selling pressure. Gold and silver fell 1.5% and 2.1% last week, respectively, while the “white” metals, platinum and palladium, fell 3.1% and 2.3%, respectively. Gold Price Sinks Below USD1,500. The gold price traded lower Monday morning, falling $3.00 to $1,499 per ounce. The price of gold broke through a number of support levels last week as it plunged over $60. A stronger U.S. dollar has weighed on gold, silver, and the broader commodity complex in recent weeks. Sovereign debt worries, which have depressed risk appetites among investors, continue to dominate the headlines with key votes by the Greek and Italian parliament over austerity packages set to take place later this week. Weakness in Gold was driven by strength in the U.S. dollar, which gained 0.8%, 0.9%, and 1.5%, against the euro, Canadian dollar, and British pound, respectively, last week. The dollar traded stronger overn

The Global Precious Metals Research Team at TD Securities highlighted why the $1,500 per ounce level may act as a magnet through the close of business on Monday: “With Friday sell off in gold our attention turns to Monday’s Comex Option expiry at 4:30 pm EST.” “With over 6,500 lots of options with a $1500 strike, that level has acted as a magnet in this afternoon’s trading session.” “Approximately 75% of this interest is puts, so we would expect that on dips below $1500 put owners will be buyers of gold.” “On any subsequent rallies above $1500 they would turn sellers. Thus the likely scenario is we trade in a $1495-$1505 range until expiry on Monday evening.” “Given gold’s $60 correction in 3 trading sessions and the support from this option expiry it seems more probable that gold will test the upper end of that range.”

Gold shares slid Friday, as the AMEX Gold Bugs Index (HUI) fell 1.7% to 505.48 in morning trading. The sector was pressured by gold bullion, which turned lower after earlier holding steady near $1,520 per ounce. The yellow metal tumbled to an intra-day low of $1,505.40, before paring a small portion of its losses to trade close to $1,510 per ounce as the U.S. dollar built on its strong gains posted yesterday. Weakness in the gold sector was fueled by a modest rally in the U.S. Dollar Index (DXY), which climbed 0.3% to 76.12 against a basket of foreign currencies. One company in the gold sector under considerable pressure on Friday was AngloGold Ashanti (AU), which retreated $1.08, or 2.6%, to $40.38 per share. According to optionMONSTER.com, significant put buying in AU occurred on Thursday. The firm noted that “6,170 August 39 puts traded, while there was no previous open interest. Almost all of those puts were bought, with the largest block of 4,575 picked up for $1.

Gold rallied ahead of Fed’s FOMC statement yesterday but the Fed delivered no surprises. While we continue to believe there will be no QE3, we also don’t discount the possibility completely. Following gold’s rally towards $1,560, the metal has since retraced on confirmation that there will be no further QE by the Fed. Despite this message from the Fed, our long-term view on gold remains unchanged — we believe gold will continue to push higher in 2011. Our core view on gold is driven not only by our observations in the physical market but also by continued growth in global liquidity, driven not so much by the Fed anymore, but increasingly by government borrowing. There was strong selling in gold above $1,550 in the physical market. While the general trend in the physical market has been buying on dips, there seems to be strong resistance to a move above $1,550. We believe this resistance will not last long, especially if gold tests above these levels a few times over the coming days. Go

The gold price hovered under $1,550 per ounce Wednesday morning ahead of the conclusion of the two-day Federal Open Market Committee meeting. The price of gold continues to consolidate in the mid-$1,500s as global markets wrestle with both sovereign debt issues and a string of weak economic data. The 12:30pm ET announcement from the U.S. central bank will offer additional clues as to Chairman Bernanke’s views on inflation and the economy. A downgrade to the Fed’s outlook on the U.S. economy could lead to higher gold prices if investors perceive any possibility of a new round of asset purchases. The Fed is expected to stay the course, which includes holding the fed funds rate near zero and announcing that its second round of quantitative easing is set to end on June 30. The Fed is not expected to make any mention of a possible QE3. In a Bloomberg survey of 58 economists, 46 forecasted that the Fed’s balance sheet will remain at its current size of $2.8 trillion. Nin

The gold price advanced higher Tuesday morning, climbing back near $1,550 per ounce. The price gold traded as high as $1,545 per ounce, rising on the back of broad-based weakness in the U.S. dollar. The U.S. dollar traded lower against most of its trading partners, notably the euro. The euro climbed to 1.437 against the dollar early Tuesday. Our focus remains on the interbank lending market in Europe. With Greece’s debt problems unresolved, the European interbank market continues to tighten. The stress in this market is not nearly at the same level as in 2008, but it is rising (as indicated by the 1m Euribor rates edging up). Strain in the interbank market could see short-term liquidity dry up. This could be extremely bearish for all assets, including gold. However, our base case is not for a complete freeze in money market activity. We still believe that gold will push higher. Gold support is at $1,534 and $1,528. Resistance is at $1,546 and $1,551.

The latest CFTC data, which captures events up to Tuesday last week, indicates that non-commercial interest in gold has declined. Non-commercial long positions stood at 825 tonnes last week (down 28 tonnes from the previous week). Short non-commercial positions increased by only 2 tonnes, to 112 tonnes, leaving the net speculative position at 713 tonnes, a decrease of 30 tonnes w/w. The current net speculative position is well off the highs of 911 tonnes reached last year May. In fact, looking at the future market, the current positioning indicates a market in which investor sentiment has been drifting along without extreme bullish or bearish positioning. This is demonstrated by the net speculative position as a percentage of open interest, which is at 30.8%, marginally down from 31.7% last week. This number was as high as 42% in 2009 and as low as 23% in February 2011. ETF gold holdings has risen by 9 tonnes last week, explaining some of the short-term movement higher in the gold pric

One can now add Alan Greenspan to the growing list of individuals who believe Greece will soon default on its sovereign debt. In an interview with Charlie Rose this week, the former Federal Reserve Chairman said that a Greek default is now “almost certain,” and that the chances of Greece defaulting are “so high that you almost have to say there’s no way out.” “The problem you have is that it’s extremely unlikely the political system will work” in a manner that effectively resolves the crisis, according to Greenspan. With regard to the implications of the Greek crisis for the U.S., Greenspan stated that it has the potential to push America into a double-dip recession. However, he also contended that the U.S. economy is performing reasonably well on its own and is unlikely to re-enter a recession if euro zone officials are able to limit the impact of the problems in Greece.

Gold stocks climbed Friday as the Market Vectors Gold Miners ETF (GDX) rose $0.43, or 0.8%, to $52.21 per share. The advance in Gold stocks and the GDX was fueled by a rebound in gold bullion, which jumped from $1,528 toward $1,540 per ounce this morning alongside the broader commodities complex. Gold stocks in Canada moved higher as well with the S&P/TSX Global Gold Index rallying 1.0% alongside the GDX. The Philadelphia Gold & Silver Index (XAU), another closely followed composite of gold stocks, jumped 0.7% to 190.76. In spite of today’s gains in the gold stocks sector, the GDX has continued to underperform the yellow metal in June. On a month-to-date basis, the GDX has fallen 8.5%, compared to a 0.1% gain for gold bullion. Year-to-date, the disparity between the gold stocks ETF and gold is even larger, at -15.3% versus 8.1%. As a result of the underperformance, the ratio of the price of gold to the GDX has reached a historically high level. This d

As anticipated gold and silver rallied yesterday afternoon in the wake of renewed aversion to risk as concerns over an imminent Greek debt default weighed on market sentiment. US consumer price data also helped, with slightly higher than anticipated figures keeping fears over rising global inflation alive. Slightly weaker-than-expected US industrial activity also contributed to increased aversion to risk. Overnight, gold and silver see-sawed as at first panicked commodity investors sold-off across the complex as crude oil prices fell. Thereafter, the gold and silver quickly regained these losses as the markets regained composure. Gold support is at $1,516 and $1,505. Resistance is at $1,537 and $1,546. Silver support is at $34.94 and $34.29, resistance is at $36.12 and $36.64.

Yesterday, Gold continued to be buoyed by Eurozone debt concerns and the threat of rising global inflation. As anticipated, the hike in Chinese reserve requirements did not prompt much of a response in precious metals prices. Inflation fears were further heightened by higher-than-expected US producer inflation data. Steady physical buying in Asia provided support for gold and silver overnight. This morning, Gold have lost ground on the back of a stronger dollar. The failure of European officials to agree on a rescue plan for Greece has placed downward pressure on the euro, and sent investors to the relative safety of the dollar. Nevertheless, we view this downward pressure as limited since inflation fears and Eurozone debt concerns will most likely resurface and should once again see investor interest in Gold return. This afternoon’s US consumer inflation figures will most likely prompt a response on Gold markets. However, over the long term, we do not view inflation as a causal driver

Yesterday’s downward pressure on Gold has eased off as concerns over the Eurozone debt situation and global inflation have re-emerged. The recent downgrade by S&P has put Greece’s sovereign debt rating at the lowest level of any country, as the agency has cited an increased likelihood of default. This has raised anxiety in markets, enhancing the safe haven appeal of gold and silver. Chinese price data has also prompted a renewed fear that inflation could erode the value of investments, pushing investors into precious metals as a more reliable store of value. Consumer inflation in China rose to 5.5% y/y, the highest level since July 2008. Producer inflation which remained steady at 6.8% y/y is still considered high. In response to stubborn inflationary pressures the Chinese central bank raised reserve requirements by 50 bps this morning. According to our analysis, changes in Chinese monetary policy (especially reserve requirements) have limited impact on Gold prices, with base metal

Gold followed a similar path, opening fractionally lower near $1,530, and later hitting an intra-day low of $1,511.40 before bouncing back to $1,515 per ounce. One of the catalysts for the slide in the gold price last week was a speech by Fed Chairman Bernanke. Although Dr. Bernanke expressed uneasiness over the “slow” pace of the economic recovery, he provided no signals that the Fed may implement a third round of quantitative easing, QE3. With markets addicted to monetary and fiscal stimulus, Bernanke’s unwillingness to offer a new dose of medicine to the ailing economy provided investors an excuse to sell assets of an any and all ilk, including gold. Following Bernanke’s speech, several well respected investors and strategists– including Mohamed El-Erian at PIMCO, David Tepper of Appaloosa Management, and Jan Hatzius at Goldman Sachs – each contended that it is quite unlikely the Fed will launch QE3 in the near future. However, each acknowledged that QE3 remains a

The Federal Reserve is unlikely to launch a third round of quantitative easing, QE3, in the near future, according to noted hedge fund manager David Tepper. In an email to CNBC, Tepper – the head of Appaloosa Management – wrote that “If (the S&P 500 falls) a couple hundred points and financial conditions tightened maybe they (the Fed) would reconsider. But there is no logic to QE3 now and the only result might be more food and energy inflation.” Tepper gained notoriety by investing in financial stocks in 2009 and posting one of the top returns in the hedge fund industry that year. In September 2010, he reiterated his bullish outlook on the markets in a CNBC interview, saying that equities were in a win-win situation: an improvement in the economy would lead to a rally, or a worsening economy would lead the Fed to launch QE2. Following his bullish call, the S&P 500 advanced over 25%, fueled in large part by the Fed’s second round of quantitative easing. Currently,

Volumes in the Gold market are very low. All eyes are on the ECB meeting this afternoon. We expect hawkish comments and an indication that the ECB base rate will go up in July. The euro could strengthen further against the dollar if the ECB hints at a rate hikes. This would aid gold’s advance. Gold has strong resistance at $1,550. A break higher could see it test $1,557. Support is at $1,536 and $1,529.

The latest signal from the US Fed, via Mr Bernanke, is that the US Fed funds rate could remain low for some time to come. As a result, short-term real interest rates in the US are set to remain negative for the foreseeable future. However, no mention was made of further quantitative easing (QE3); the current program (QE2) ends this month. While low real interest rates support a higher gold price, we see the dominant causal driver of gold as global liquidity. We measure global liquidity as the Fed’s balance sheet plus global FX reserve holdings. Using this measure, the Fed’s balance sheet contributes around a third of global liquidity. The rest is made up of government borrowing. While further QE by the Fed would no doubt accelerate gold’s ascent in the medium term, a refusal to expand the balance sheet further shouldn’t end gold’s push higher ,as we doubt that global government borrowing (in nominal terms) will decline soon. We therefore believe that global liquidity will grind higher

The odds that gold will “soon” reach a new all-time record high are “good,” according to the founder of one of the most closely-tracked gold sentiment indicators. The most recent Hulbert Gold Newsletter Sentiment Index (HGNSI), which measures market timers’ recommended exposure to gold, came in at 20.3%. This figure is just 13 points above the 7% level from mid-May, when gold fell to as low as $1,480 per ounce. From a contrarian perspective, this is a particularly bullish sign for the yellow metal. According to Mark Hulbert, founder of the HGNSI, “Normally in the face of a $65 increase in gold’s price, we’d expect to see the HGNSI jump by more than this, which is why contrarians conclude that bullishness in the gold market remains healthily subdued.” Hulbert went on t o say that “In fact, even though gold closed Monday within 10 dollars of its previous all-time high, the HGNSI currently stands 53 percentage points below where it stood when gold hit that earlier high.”

The latest futures market activity (according to the CFTC data) puts the net long speculative position in gold at 31.5% of open interest. This is a substantial jump from 25.6% the previous week. While this jump in speculative length seems big, the market for gold still does not look overextended. The two-year average position of net speculative longs relative to open interest is 33%, with the maximum at 42% and the minimum at 23% over this period. Our strategic view remains unchanged: stay long gold. In our gold model, global liquidity is central to deriving gold’s “fair value”. With global liquidity still rising, gold should push higher. Global liquidity is being driven not so much by the Fed anymore, but increasingly by government borrowing. For gold, support is at $1,528 and $1,515. Resistance is at $1,550 and $1,558.

Gold remain range-bound ahead of the US non-farm payroll numbers. Apart from US payroll figures this afternoon, our focus is now shifting towards inflation and inflation expectations following the weak economic data the past few days. Any slowdown in employment and growth, in conjunction lower inflation, could trigger broader concerns over stagflation. This may well favour demand for US treasuries. Greater demand for US treasuries and the ongoing Euro-zone debt problems may favor the dollar (consistent with our FX strategists view on the euro/dollar exchange rate). We also keep a close eye on Euro-zone CPI next week and the ECB meeting which could signal another rate hike soon. No rate hike from the ECB in coming months could see the euro give up some ground against the dollar. However, while developments in coming days may favor the dollar, we believe demand for gold should remain robust. Gold support is at $1,520 and $1,508. Resistance is at $1,545 and $1,557.

Following the poor economic data in the US, break even inflation (as derived from the bond market) is falling. Two-year break even inflation is down from 2.5% a month ago, to 1.8% yesterday. Ten-year UST yields are at their lowest level this year. Yesterday’s weak employment numbers and falling inflation expectations have intensified talks of possible QE3 by the Fed. As far as gold is concerned, QE3 would be bullish. Our analysis suggests that for every $500bn by which the Fed expands its balance sheet, gold would make a step-change of $80-$100. Even at $1,540, gold would provide value. However, our base case is that the Fed won’t implement further QE. Our fundamental view on gold is bullish regardless of QE3. Our analysis suggests that gold’s causal driver is global liquidity, of which only one-third is the Fed’s balance sheet. The other two-thirds of liquidity are driven by global government borrowing. We do not believe that government borrowing in nominal terms is about to decline.

After dropping as low as $1,529 per ounce early yesterday morning, the gold price rallied above $1,550 per ounce as speculation of “QE3” made the rounds across trading desks. With the weak ADP employment data, expectations are that Friday’s jobs report from the Labor Department will miss estimates. QE3 speculation will drives Gold price higher. With QE2 ending on June 30, speculation is rising that Chairman Bernanke will engage in a new round of asset purchases – or money printing – if the economic data continues to deteriorate.

Gold is benefiting from a weaker dollar. Although there seems to be sporadic scrap-selling of gold, physical market buying interest has been strong so far this week, and we expect this trend to remain in place. We expect buying interest on approach of $1,530 and $1,526 to provide support. There is strong resistance at $1,540. A break above this level could see gold test $1,548.