Week ending 22nd March 2013

Gold breaks through US$1,600, on 3rd consecutive week of gains.

This past week will be remembered for the Cypriot banking crisis and a wakeup call to people who deposit funds with banks.

The events of the week confirmed continuing Eurozone worries with Gold enjoying safe-haven demand. Buying of physical was in strong demand but the price was countered somewhat by the growing strength of the US$ to the Euro. Reaching a high of US$1,613.75 Gold was up over 1.1% on the previous week high.

The week started with Cyprus being granted US$13B in aid on the proviso that people with bank deposits forfeit some money (6.75% of all deposits) to shore up the banks. This unprecedented policy sent the Euro reeling and strong demand for US$ and Gold.

By Tuesday Cyprus's parliament had rejected a modified plan to tax all deposits greater than 100K Euro at a rate of 15.6%. Russia had stepped in with Putin calling such measures as unfair, unprofessional and dangerous. Even the Orthodox Church stepped in offering to mortgage it's assets.

As of this weekend, Cyprus has until Tuesday of this week to accept a deal or the European Central Bank has said they will cut Cypriot banks off from emergency funding. Reports are that a deal is close and all could be resolved by Monday.

This coming week is expected to be quiet on the news front as we head towards Easter, but based on last week we may still see some surprises.

Short Term Update:

Gold now appears to have solid buying at just above US$1,600, while rallies during the week that tested US$1,615 found strong selling.

The Technical Experts are saying that if Gold breaks through US$1,620 it will then likely test the top of a bearish trend channel at US$1,643.

We are still aware of that the Money Managers are holding strong 'short' positions which could be tested if Gold takes a look at US$1,620 supporting the view that we could then see US$1,640 or more.

The longer term outlook for Gold remains strong.

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