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Bloomberg, 14/6) -- Gold traders
turned bearish for the first time in a month as investors reduced
holdings in exchange-traded products for an unprecedented 17th
consecutive week and India, the biggest buyer, announced curbs on
imports.
Eighteen analysts surveyed by Bloomberg expect prices to fall next week, with 14 bullish and four neutral, the largest proportion of bears since May 17. Investors sold 490.4 metric tons valued at $21.8 billion through ETPs since Feb. 8 and the 2,124.7 tons left is the least they have held since April 2011, data compiled by Bloomberg show.
Bullion is on track for the first annual drop since 2000 as some investors lose faith in it as a store of value. While the slump into a bear market in April hurt billionaire hedge fund manager John Paulson and producer Newcrest Mining Ltd., it spurred purchases of coins and jewelry worldwide. That demand may be threatened in India after the nation raised gold import taxes to contain a record current-account deficit.
The metal fell 17 percent to $1,384.85 an ounce by 11:06 a.m. Singapore time this year and is trading 28 percent below the record $1,921.15 set in September 2011.
The Standard & Poor’s GSCI gauge of 24 commodities dropped 3.1 percent since the start of January and the MSCI All-Country World Index of equities rose 7.1 percent. Treasuries lost 1.4 percent, a Bank of America Corp. index shows.
India raised the import duty to 8 percent from 6 percent on June 5 and the central bank also further restricted shipments. Overseas purchases slid to an average of $36 million a day in the 14 business days through June 7, compared with an average $135 million a day in the 13 days through May 20, Raghuram Rajan, chief economic adviser in the Finance Ministry, said June 11. The All India Gems & Jewellery Trade Association has asked the government for a discussion on reversing the tax increase.
The move to slow demand comes amid the worst drop in ETP holdings since the first product was listed in 2003. Assets fell for 17 weeks through June 7 and are down 11.2 tons so far this week. Paulson, the largest investor in the SPDR Gold Trust, the biggest ETP, had a 13 percent loss in his Gold Fund last month. That takes the decline since the start of the year to 54 percent, according to a copy of a letter to investors obtained by Bloomberg News.
Bullion rose 57 percent since 2008 as the Fed led a global surge in money printing to boost growth. While the U.S. central bank will slow purchases, it will still buy $65 billion a month by October, the median of 59 economist estimates compiled by Bloomberg this month shows. The Bank of Japan restated its April pledge this week to increase the monetary base by 60 trillion to 70 trillion yen ($742 billion) a year, and refrained from adding extra policy tools to counter bond-market volatility.
“Global fundamentals, including accommodative monetary policy, remain positive for gold,” said Adrian Day, who manages about $135 million of assets as the president of Adrian Day Asset Management in Annapolis, Maryland. “The market is slowly realizing that despite all the talk about tapering of bond buying by the Fed, there will be no meaningful global tightening any time soon.”
The surge in equities over the past three quarters, which also damped demand for gold, is now partially reversing. The MSCI All-Country World Index reached a seven-week low yesterday. The U.S. Dollar Index, a measure against six currencies, slipped to the weakest in almost four months.
Eighteen analysts surveyed by Bloomberg expect prices to fall next week, with 14 bullish and four neutral, the largest proportion of bears since May 17. Investors sold 490.4 metric tons valued at $21.8 billion through ETPs since Feb. 8 and the 2,124.7 tons left is the least they have held since April 2011, data compiled by Bloomberg show.
Bullion is on track for the first annual drop since 2000 as some investors lose faith in it as a store of value. While the slump into a bear market in April hurt billionaire hedge fund manager John Paulson and producer Newcrest Mining Ltd., it spurred purchases of coins and jewelry worldwide. That demand may be threatened in India after the nation raised gold import taxes to contain a record current-account deficit.
The metal fell 17 percent to $1,384.85 an ounce by 11:06 a.m. Singapore time this year and is trading 28 percent below the record $1,921.15 set in September 2011.
The Standard & Poor’s GSCI gauge of 24 commodities dropped 3.1 percent since the start of January and the MSCI All-Country World Index of equities rose 7.1 percent. Treasuries lost 1.4 percent, a Bank of America Corp. index shows.
India raised the import duty to 8 percent from 6 percent on June 5 and the central bank also further restricted shipments. Overseas purchases slid to an average of $36 million a day in the 14 business days through June 7, compared with an average $135 million a day in the 13 days through May 20, Raghuram Rajan, chief economic adviser in the Finance Ministry, said June 11. The All India Gems & Jewellery Trade Association has asked the government for a discussion on reversing the tax increase.
The move to slow demand comes amid the worst drop in ETP holdings since the first product was listed in 2003. Assets fell for 17 weeks through June 7 and are down 11.2 tons so far this week. Paulson, the largest investor in the SPDR Gold Trust, the biggest ETP, had a 13 percent loss in his Gold Fund last month. That takes the decline since the start of the year to 54 percent, according to a copy of a letter to investors obtained by Bloomberg News.
Bullion rose 57 percent since 2008 as the Fed led a global surge in money printing to boost growth. While the U.S. central bank will slow purchases, it will still buy $65 billion a month by October, the median of 59 economist estimates compiled by Bloomberg this month shows. The Bank of Japan restated its April pledge this week to increase the monetary base by 60 trillion to 70 trillion yen ($742 billion) a year, and refrained from adding extra policy tools to counter bond-market volatility.
“Global fundamentals, including accommodative monetary policy, remain positive for gold,” said Adrian Day, who manages about $135 million of assets as the president of Adrian Day Asset Management in Annapolis, Maryland. “The market is slowly realizing that despite all the talk about tapering of bond buying by the Fed, there will be no meaningful global tightening any time soon.”
The surge in equities over the past three quarters, which also damped demand for gold, is now partially reversing. The MSCI All-Country World Index reached a seven-week low yesterday. The U.S. Dollar Index, a measure against six currencies, slipped to the weakest in almost four months.
Written by: Kontak Perkasa Futures
PT.Kontak Perkasa Futures, Updated at: 1:31 PM
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