Gold hit a high of $1,435/oz in late European trading today, and spent the day in New York above $1,420/oz. Silver was mostly steady, as both metals continue to build a floor near current levels. COMEX gold closed up $19.80 to $1,426.75 and silver was up 43¢ to $23.39.
Once again, remarkable physical demand provided most of the support, even as gold ETPs shed over 110 tons today. Short covering played a minor role in prices supports, as gold levels are only slightly above the marginal cost of production.
The G-20 gave a wink and a nod to Japan’s currency devaluation, as a few analysts are starting to ponder whether the Fed’s $85 billion a month of liquidity flowing into the market needs to be raised. The U.S. economy is not responding to the stimulus, as the banks are keeping the money in their vaults instead of lending it out.
The dollar was stronger for most of the day today, hitting a two-week high before fading in late afternoon trading. Oil was also higher, as it attempts to cover from 9.5 month lows. U.S. stocks were moderately higher.
European stocks break a recent losing streak and Italian bonds improved on news that a new Italian president had been elected. The euro was down slightly on the strength of the dollar.
The Nikkei closed near a five-year high, while the earthquake in China caused Chinese and Hong Kong stocks to drop.
Volume in the gold market has dropped substantially from the huge spike on Monday the 15th. It is unknown whether this is a sign that phenomenal physical demand has been sated, or whether this is a symptom of physical buyers being simply unable to find physical gold to buy! As we reported last week, the Hong Kong Gold and Silver Exchange ran completely out of gold bullion on Friday, and shortages are also being reported in India.
While gold is still somewhat available in the U.S., silver is extremely scarce. The U.S. and Royal Canadian Mints were already seeing near-record demand before the price crash on April 12th initiated a global frenzy for precious metals.