For the week, spot gold closed at $1,117.60 per ounce down $1.60 or 0.14 percent. Gold equities, as measured by the XAU Gold & Silver Index (XAU) fell 1.85 percent for the week. The U.S. Trade-Weighted Dollar Index (DXY) fell 0.36 percent.
Strengths
- Gold and equities were able to rebound as Federal Reserve Chairman Ben Bernanke appeared before Congress and reaffirmed that short-term interest rates would remain low for an extended period of time and predicted the economic recovery would remain slow.
- Desjardins Securities said copper stockpiles in China are declining swiftly and that many in the market are wrong in thinking that speculation, rather than fundamental demand, has underpinned imports of copper into China. The company also said fundamental demand far exceeds general expectations.
- The Bombay Bullion Association said India’s gold imports in February are most likely between 30-35 tonnes. This is at least a 280 percent increase year-over-year when compared to 2009 imports of 7.9 tonnes during the month of February.
Weaknesses
- Weaker-than-expected consumer confidence and new home sales reports set the mood earlier in the week as traders and investors remained on the sidelines.
- Investors remain risk averse after ratings agency Fitch downgraded Greece’s largest banks ahead of Greece’s 10-year bond auction. Gold has been under pressure as of late due to a strengthening dollar primarily due to a weakening euro.
- The National Energy Regulator of South Africa has approved Eskom’s 28 percent tariff increases in 2010 and nearly 26 percent the next two years. With the South African economy is still in recovery mode, tariff increases on power utility will impact mining and the wider economy.
Opportunities
- Platinum Guild International has released a report stating young women are spurring demand for platinum jewelry demand in China. The report states that two-thirds of platinum jewelry buyers in China are women between 18 and 34 years old.
- The Financial Times reported the London Metals Exchange will be launching derivatives contracts on cobalt and molybdenum. The new offerings come as investor appetite for commodities continually increases as strong consumption in China drives demand and higher prices.
- JPMorgan said the dollar may fall against Japan’s currency to as low as 87 yen as investors reduce bets that the Federal Reserve will further tighten monetary policy in the near future.
Threats
- The Commodities and Futures Trading Commission (CFTC) will discuss position limits for gold, silver and copper futures markets next month.
- America’s third largest bank recently notified customers that effective April 1, 2010, they reserve the right to require seven days advance notice before permitting a withdrawal from all checking accounts.
- In efforts to ease the housing debacle, the Obama Administration may ban all foreclosures on home loans unless they have been screened and rejected by the government’s Home Affordable Modification Program.
