Gold and silver end week lower...
Recorded Friday 16 March 2012
Transcript from 16 March by Ben Traynor
Based on Friday London Fix prices, gold has suffered its fourth losing week of 2012, and its third in succession.
Friday's PM Fix was $1658 Dollars an ounce, a 1.7% fall on last Friday's. Based on spot market prices, however, gold was down over 3% for the week by the time London closed on Friday. You may recall that gold rallied strongly last week soon after the Friday afternoon Fixing, which took place shortly after 3PM in London.
Silver also fell this week. Friday's Dollar Silver Fix was $32.27, a 4.7% weekly drop.
Gold in Euros meantime hit a ten week low on Friday. The same was true of gold priced in Sterling. Both currencies rallied strongly against the Dollar following the release of US inflation figures.
Annual consumer price inflation stayed at 2.9% in February. Month on month, however, prices rose at their fastest rate in nearly a year. The US Bureau of Labor statistics says most of this was down to rising gasoline prices. Gas prices surged 6% last month, compared to a rise of less than 1% in January.
Despite these inflationary pressures, the Federal Reserve decided to leave monetary policy on hold when it met on Tuesday. The Fed reported that it expects monetary policy to remain accommodative for the foreseeable future. There was however no obvious hint that further stimulus is on the way, which dampened enthusiasm for gold.
Stock markets rallied on Tuesday, with the Dow hitting levels not seen since the back end of 2007. Earlier that day, the Fed published the results of its annual banking sector stress tests. The test, designed to show how banks would cope in adverse conditions, was passed by 15 out of 19 banks. Also on Tuesday, JP Morgan Chase announced it is raising its stock dividend by 20%.
India announced on Friday that it is doubling its import duty on gold, for the second time in as many months. Imports of refined gold will see their duty raised from 2% to 4%. Unrefined gold will also see its duty double, from 1% to 2%. Since the start of the year, Indian gold import duties have effectively quadrupled.
Data published by the World Gold Council last month show that India imported 969 tonnes of gold in 2011. India's finance minister describes the recent growth in gold imports as "one of the primary drivers" of India's trade deficit.
Next week brings the latest data on UK inflation, as well as minutes from the Bank of England's monetary policy meeting earlier this month.
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