Week ending 8th February 2013

Gold & Silver range trading. Aussie $ falls 1.2%+ for the week.

Whilst Gold is range bound between US$1,660 and US$1,680, traders in the US attempted to hit it twice during the week but failed. It appears that the weak holders are now almost gone.

Bigger action was seen on the Aussie $ reaching a 3 month low affter the RBA released their quarterly statement cutting economic growth forecasts. While they left interest rates unchanged at 3% (the lowest in 5 years), the door remains open for a further rate cut next month.

Reuters reported in AusMint News (refer to our website) 'Precious Gold eases on Wall Street rally' - Gold unchanged for the week, futures down marginally, while equities (S&P) up 0.3% for the week.

Last week on the international front:

Central Bank of India said that they may limit Gold imports as they grapple with a trade deficit. India imported 750 tonnes of Gold last year, a massive $ outflow. In response the government increased import duty to 6% last year with further increases a possibility.

European Central Bank President Mario Draghi said economic activity in Euro zone should gradually recover late in 2013 but there are more negative risks than positive ones.

Summary:

Improving equity markets are competing head on with investments that would otherwise flow to Gold indicating that February will mostly be a defensive month if stocks continue to advance.

If it is correct that the weak sellers are almost gone, and with strong support at the bottom of the range (US$1,660), Gold could be about to break through this range and progress into an upward trend by the end of February and into March.

At the macro level, there have been renewed economic fears over the Euro zone and with the Bank of Japans recent efforts to weaken the Yen, could contribute to a boost in Gold buying patterns in the weeks and months ahead.

Emerging markets continue to be strong buyers led by China while the money printing continues in US and Europe.

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The following sample is Gold over the 3 Months ending 8th February