Gold News

Spot gold beats stocks and bonds as Q2 begins

Spot gold prices traded in a tight range in Asia overnight, opening in London just 30 cents lower from Friday's US close at $664.60 per ounce.

The dip was slightly exaggerated versus Sterling as the British currency rose on the foreign exchanges.

Gold opened the first day of April trade in London down 0.3% at £337 per ounce.

For French and German investors looking to buy gold, the metal began 15 cents lower at €497.60 per ounce.

From the start of 2007, however, gold has risen more than 4% – outstripping stocks and bonds during the first quarter of the year.

And as Q2 begins, the uptrend of higher highs and higher lows starting back in Oct. remains intact.

"It's apparent that no one wants to be short of gold whilst the Iranian hostage situation remains unresolved," says Investec Australia today.

"Britain [is] urging the European Union to help isolate Iran at a meeting of EU ministers."

Tehran claimed at the weekend that all 15 British service staff it seized in the northern Gulf last week have now confessed they had strayed into Iranian waters.

Two hundred Iranians threw firecrackers and bricks at the British Embassy in Tehran, meantime, protesting at the group's apparently "illegal" entry into Iranian territory.

But any idea that gold's "safe haven" status will send it higher on such news has once again been disappointed.

Gold hit its all-time highs above $850 per ounce during the US-Iranian hostage crisis of early 1980. Since then, however, geopolitical tensions have failed to drive investors into the metal.

"Once again a failure to break into the next band above $670 leaves us thinking gold is looking heavy at these prices," says Investec.

"[It's] likely to sell off if Iran gives in to pressure."

Overnight in Tokyo, gold futures for Feb. '08 rose to the equivalent of $670.82 per ounce.

"Gold is waiting to break the trading range it's in now without much news," reckons Nobito Kaneda, a precious metals trader at Sojitz Corp.

US crude oil futures for May delivery dipped 0.2% to $65.74 per barrel during the electronic.

Meantime in the physical gold market, "it looks like people are reluctant to take fresh positions," according to a Singapore scrap dealer today.

"Indonesia remains a seller at this time. India and Thailand are buying but the amount is quite small."

Last month, however, saw much lower supplies of gold scrap from the Chinese market, reported Heraeus, the giant German refinery group, on Friday.

"Retail investors in Germany were in recent days attracted by the increased media presence of the yellow metal," the firm's latest weekly report goes on.

"We have seen more interest for our investment bars, mostly for the bigger ones, but also for the smaller sizes between 5 and 50 gram."

Heraeus also reports growing demand for investment gold from China and Hong Kong, picking up from the start of the New Year's holiday in Feb.

"In the South of China, in Guangzhou," reports Julian Phillips of the GoldForecaster, "retail sales of gold coins and gold products have reached 7.82 tonnes since February.

"That would equate to 94 tonnes per annum."

For the full story on China's growing appetite for gold – and what it means for global prices – click here now...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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