Malaysia Gold Investment

Gold in particular, were buoyed by disappointing US consumer confidence numbers. The Conference Board’s measure fell to 63.4 in March, from a revised 72.0 in the previous month. Given that expectations were already quite low at 65.0, this result proved particularly disheartening. As an indication that the US economy was still fragile (consumption expenditure accounts for 70% of GDP), the consumer confidence figure would ease worries over a premature exit from the Fed’s monetary accommodation. Given the strong positive relationship between global liquidity and precious metals (especially gold), this is supportive of the complex. However, subsequent comments by various Fed members shows that the FOMC might be increasingly polarised on the issue of the timing of monetary tightening. Such uncertainty and increased speculation, could spark a rise in volatility in Gold markets as the QEII deadline of June draws near. Physical buying of gold has been relatively quiet overnight, dampened perha...

Gold once again came under pressure off the back of encouraging US data flow. Personal spending figures for February increased by 0.7% m/m, a better-than-expected result (consensus: 0.5% m/m) and a marked improvement on January’s increase of 0.3% m/m (revised). Pending home sales data also showed an unexpected increase, showing a 2.1% m/m in February. This was particularly encouraging after the 2.8% m/m and 3.2% m/m declines seen in January and December, respectively. The uptick in consumer spending and signs of a strengthening housing market have boosted investor optimism that the US economy is entering a more solid phase of growth. Consequently, the appeal of precious metals as a safe-haven has been diminished. However, over the medium term, global uncertainty (unrest in the MENA region, the Eurozone debt crisis and the prospects for the Japanese economy) remains high and we could see renewed interest in the complex, especially if there are any developments perceived as negative on t...

Last week saw open interest begin to climb after having reached the lowest point for March in the previous week. As of last Friday, gold open interest stood at 1,622 tonnes on COMEX, from 1,609 tonnes the previous Friday. Accompanying this rise in open interest was a modest 0.8% w/w rise in the gold price. Net speculative length also signalled tentative interest in gold, as it too rose from March’s low of the previous week. Rising 15.8 tonnes over the past week, the net speculative position for gold now stands at 676.9 tonnes. The rise was largely due to a removal of 35.5 tonnes in speculative shorts, even though at the same time, speculative longs fell by 19.7 tonnes. Although the increase was modest, it is an encouraging sign that investors are less bearish on gold. Should safe-haven demand remain intact, we could see gold recover from the liquidations seen in the immediate aftermath of the earthquake in Japan. Speculative shorts, currently at 111.2 tonnes, are within touching distan...

Yesterday saw an aggressive bout of speculative selling and profit-taking in afternoon trade. For gold and silver the trigger occurred around the $1,450 and $38 levels. Since then, gold and silver have started to rebound, with silver leading the way. Continued conflict in Libya, growing focus on the European debt crisis and uncertainty surrounding the longer-term impact of the Japanese earthquake should keep investors interested in gold and silver. Poor durable goods out of the US, may also be lending support. Durable goods orders fell 0.9% m/m in February, far short of the 1.2% m/m increase the market expected. Signs that the US economy remains fragile are bullish for precious metals as it alleviates fears over an early reigning in of monetary accommodation. To this end, US Consumer Confidence numbers, out later today, could prompt some reaction. Given that consumer buying remains the engine of the US economy (consumption expenditure accounts for around 70% of GDP), a poor result migh...

Gold yesterday on raised risk aversion, stemming from several developments. A bombing in Jerusalem further raised concerns over political stability and the possibility of further turmoil in the MENA region. The rejection of austerity measures by the Portuguese parliament has once again brought the Eurozone sovereign debt crisis into the spotlight. In addition, sentiment has been soured further by speculation that Moody’s will downgrade Spanish banks. The threat of financial contagion throughout the Eurozone is continuing to encourage interest in precious metals as a safe-haven. Not much is expected, in terms of a comprehensive package to address the debt crisis from the EU Summit starting today. For the most part, the rally in gold and silver continues, with silver leading the way on approach of new highs. Gold support is at $1,430 and $1,420. Resistance is at $1,446 and $1,451.

COMEX gold has seen the net long non-commercial position decline to 27.96% of OI, down from 30.5% the previous week. Current levels are below the average level of 33% over the past 2 months. We believe that gold could touch $1,500. At this stage, we target $1,500 in Q3:11, as in the interim we foresee seasonal weakness in the physical gold market. The end of Q1 and Q2 typically see gold scrap volumes increase, which is likely to subdue the gold price. The Gold support is at $1,406 and $1,393. Resistance is at $1,436 and $1,458.

Gold is finding resistance on approach of $1,430. While this may continue for some time, and we do not discount a correction towards $1,380, we still believe that gold will touch new highs in 2011. As pointed out on in Commodities Daily of 25 Feb 2011, apart from heightened risk aversion due to the political tensions in the Middle East, the rise in crude oil is resulting in secondary developments which we believe are adding further support to gold. Also, real interest rates have been dropping like a stone again. Currently, the US 5 year inflation linked bond yield is at its lowest level since at least 2004. The decline in real interest rates is the result of a rapid increase in inflation expectations in recent days, while nominal interest rates remain largely unchanged. As pointed out in Commodities Daily yesterday, given that inflation has been largely absent in the US, and the US Fed doesn't target inflation explicitly, the likelihood of the US raising nominal rates remains small...