Week ending 3rd May 2013

Has Gold bottomed? Physical demand continues to be strong.

Other than some mid-week volatility Gold is finding support at these levels on the back of strong physical demand. The question is have we found a bottom level or will we continue to see some volatility in the weeks ahead?

The 'paper' futures traders and the selling rates of the major ETF's have influenced the sell-off in mid April and continue to hold further resurgence in the Gold price, for the short term at least. It was reported that the major ETF outflows have hit 354 tons this year that more than reverses last year's net rise of 220 tons.

Physical demand continues to be strong and has now impacted on AusMint's own supply where we are awaiting shipment on certain products (which we expect to receive this week). Premiums in Hong Kong and Singapore have been recorded at their highest levels for several years supporting the physical demand in Asia. All this on the back of Chinese holidays during the week.

We may see some volatility this week, which on the downside may be a time to buy, while the technical's forecast that a break above US$1,480 may then see a test of US$1,525.

Meanwhile on the global macro front.

The case for Gold going higher in the medium term continues to be strong based on a couple of reports including:

• European Central Bank (ECB) lowered interest rates by 25 basis points and importantly the Chairman stated that the ECB is 'technically ready' for negative deposit rates (you get back less than what you have on deposit).
• The severe austerity measures imposed on a number of Eurozone countries are not working which may force politicians to reconsider policy options.
• Bloomberg reported that the Eurozone jobless rate soared to record 12.1% in March, supporting the need for a policy rethink.
• The US Fed continues to print money with their bond buying campaign.

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DISCLAIMER: Australia Mint Bullion & Coin does not provide financial advice and does not employ financial advisors. Any opinions expressed within news articles or market updates are not intended as recommendations. If you are looking for investment advice, please seek independent, specific advice regarding your personal financial situation from a qualified professional.