Consensus forecast 2015 gold price average: DOWN

Gold on Thursday plunged more than $30 an ounce as eurozone troubles fade from headlines and the focus shifts to US fundamentals, the rampant dollar and a likely June rise in interest rates.

In heavy trade of more than 22m ounces by lunchtime in New York, gold for delivery in April fell over $35 an ounce or 2.8% from Wednesday's close hitting a low of $1,251.84 an ounce – the lowest in two weeks and the worst trading day in more than a year.

The metal is still trading up nearly $70 or almost 5.5% in 2015, but is down sharply from an intra-day high of $1,307 hit last week.

Gold's gains this year have been ascribed to safe haven buying amid currency turmoil, a slowing global economy, the continuing fallout of the collapse in oil prices and a crisis in the Eurozone.

Norman has been the most accurate forecaster – the outright winner five times and a runner up four times

But with the first hike in more than six year likely at the Fed's June meeting raising the opportunity costs of holding gold because the metal provides no yield, gold traders refocused their attention on fundamental factors.

The consensus forecast seem to be that today's decline was only the beginning and the gold price will trend weaker in 2015 – the third year in a row.

According to a new survey by the London Bullion Market Association of 35 analysts, gold will trade in a narrow band this year to average $1,211 a troy ounce with a range between $1,085 to $1,356 during the year.

Ross Norman of Sharps Pixley is the most bullish analyst with a forecast of $1,321 average and a $1,450 high. Norman has been the most accurate forecaster in recent years coming in as the outright winner five times and a runner up four times.

Adam Myers of Credit Agricole is the most bearish with $950 as an average and a low point of $880. Myers is one of five analysts predicting a dip below $1,000 this year.

Last year analysts were bearish on gold, forecasting a price of $1,219, according to the LBMA. The gold price averaged $1,267 in 2014, some 4% higher than estimated.

Silver, the worst performing of the four metals in 2014, is forecast to increase in price by 2.1%.

Forecasters are more bullish about the prospects of the PGM prices, with platinum predicted to be the best performing with an increase of 5.6% and palladium forecast to increase by 5.3%.

Click here for the full report from the LBMA. 

Sourced from Mining.com

Is This The Reason Why Gold Is Suddenly Surging?

Total Gold ETF physical holdings rose 0.85% on Friday (following Thursday's 0.78% rise) combining for thebiggest 2-day rise since Nov 2011 (adding 843,000 ounces of gold in 2 days). Of course these moves came right after the SNB decision ands are the largest since the peg was announced in 2011. GLD - the largest gold ETF - saw holdings surge 1.9% on Friday, the biggest single-day surge in almost 5 years.

TotalGold ETF Holdings surged 1.65% in the last 2 days

SPDR GLD ETF Holdings spiked 1.9% on Friday and 3.3% in the last 2 days - the biggest 2-day rise since May 2010...

Of course, once again this shows that only paper gold matters for price determination... physical is irrelevant (until of course, physical is all that matters).

Swiss shocker lights fire under gold price

Gold on Thursday shot higher after Switzerland's central bank scrapped efforts to keep the franc from appreciating sending shockwaves through financial markets already in turmoil as a result of a stock market plunge, the oil price slide and the collapse in copper this week.

In later morning trade on the Comex division of the New York Mercantile Exchange gold for February delivery soared to a high of $1,267.20 an ounce, up $32.70 or 2.5% from Wednesday's close. Volumes were nearly double recent trading session with 23.7 million ounces changing hands by lunchtime.

Gold is now trading at its highest since September 5 and has jumped more than 7% jump so far this year. Gold has gained more than $120 from its near four-year low hit early November.

Even a sage like Faber may have been surprised that his prediction would pan out so swiftly

After the announcement by the Swiss National Bank ended the currency cap the franc jumped 16% against the euro and more than 30% against the dollar as traders tried to figure out the impact on global financial markets.

The SNB also entered further unchartered territory by cutting the interest rate on certain bank deposit account balances to -0.75% – that's minus three-quarters of a percent.

Marc Faber, economist, investment guru and Wall Street stalwart, came out on Tuesday this week as the year's biggest gold bull, saying a collapse in confidence in the world's central banks could see gold rallying 30% this year.

Even a sage like Faber aka Dr, Doom (his investment newsletter is called the Gloom Boom Doom Report) may have been surprised that his prediction would pan out so swiftly:

“My belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”

Marc Faber: Gold will rally 30% in 2015

Gold on Tuesday took a breather after a strong start to the year with futures contracts in New York Mercantile retreating slightly to change hands for $1,232 an ounce, down just over $2 from Tuesday's close.

Gold is still trading at its highest since October 22 after jumping more than 4% so far this year. Gold hit a near four-year low of $1,143 early November.

Marc Faber, economist, investment guru and Wall Street stalwart, came out on Tuesday as the year's biggest gold bull, saying all asset classes except precious metals are overpriced and predicting a sharp move higher for the metal:

“I’m positive [that] gold will go up substantially [in 2015] — say 30%,” Faber, whose investment letter is called the Gloom Boom Doom Report, said at Société Générale’s global strategy presentation in London on Tuesday.

“My belief is that the big surprise this year is that investor confidence in central banks collapses. And when that happens — I can’t short central banks, although I’d really like to, and the only way to short them is to go long gold, silver and platinum,” he said. “That’s the only way. That’s something I will do.”

Gold has tanked 35% since reaching an all-time high just above $1,900 an ounce in September 2011, making it one of the worst performing assets in recent years. In 2014, it lost 1.5%, following a 28% slide in 2013. So far in 2015, however, investors have taken a liking of the metal, with the front-month contract up 4.1%, outpacing gains for even a solidly performing dollar. (U.S. equities have been testing the waters on both sides of the break-even mark.)

“We simply have highly inflated asset markets. Real estate is high, stocks are high, bonds are high, art prices are high, and interest rates and short-term deposits are basically zero,” Faber said. “The only sector that I think is very inexpensive is precious metals, and in particularly precious-metals stocks.”

Faber, at times identified as “Dr. Doom,” singled out U.S. stocks as especially overvalued. Emerging markets, in contrast, could be on the cusp of another bull run, although investing in them in the early part of 2015 may be premature, he said.

“I don’t think they are that cheap. Valuations are not expensive, but they are not the bargain of the century. But I believe some time in the next six to nine months emerging economies will become relatively attractive.”

Gold, silver price rally: No convincing ETF investors

Gold on Monday continued to build on recent gains as sagging equity markets, a fresh slide in the price of oil and doubts about the strength of the US economy saw investors piling into safe haven assets.

In afternoon trade on the Comex division of the New York Mercantile Exchange gold for February delivery was changing hands for $1,235.60 an ounce, up $19.50 or 1.6% from Friday's close.

Gold is now trading at its highest since October 22 and has jumped more than 4% jump so far this year. Gold hit a near four-year low of $1,143 early November.

Uncharacteristically silver trade was more subdued. March contracts rose 1.1% or $0.18 to $16.60 compared to Friday's close and near the day's highs. Silver is up 6.5% in 2015 after losing some 20% of its value last year.

Last week's meagre 1.7 additional tonnes of silver can hardly be considered a trend-reversal

Roughly 60% of silver demand is from industry, with investment and jewellery demand making up the remainder, and the silver price has been dragged down by weakness in other industrial metals like copper which is trading near five-year lows.

Despite a rally in precious metals this year, investors in exchange traded funds backed by physical gold continued to lighten their exposure and silver buyers have not returned to the market in big numbers.

Last week saw a small reduction in holdings and at 1,599.9 tonnes as at January 9, holdings in the dozens of gold-backed ETFs listed around the globe, are now down to levels last seen April 2009.

SPDR Gold Shares (NYSEARCA: GLD) – the world’s largest gold ETF holding more than 40% of the total – has been even harder hit with holdings falling to levels last seen September 2008.

Gold bullion holdings in global ETFs hit a record 2,632 tonnes or 93 million ounces in December 2012, but the outflows have been relentless since then.

Retail investors in silver took a different tack to gold investors last year, stocking vaults at physical silver-backed ETFs to record levels in October of 20,182 tonnes.

But the liquidation since then has been rapid (288 tonnes during the last week of 2014) and last week's meagre 1.7 tonnes addition for total holdings of 19,380 tonnes can hardly be considered a trend-reversal.

Gold price rallies into teeth of rabid dollar

Commodities priced in US dollar usually have an inverse relationship to the world's reserve currency.

None more so than gold.

The gold price jumped the $1,200 barrier on Monday, but given the turmoil on markets and fears of a Lehman-magnitude crisis in the Eurozone, the metal would be expected to be trading higher than it is.

The greenback hit an all time high in February 1985 just as gold bottomed at $284 an ounce

The only thing keeping it back is the stronger US dollar.

On Monday, the greenback hit the highest level since November 2005 against the currencies of major US trading partners, with the dollar index topping 92.

That compares to a record low of 71.6 in April of 2008 and a record high of 164.72 in February 1985 when the price of gold bottomed at $284.25 an ounce.

While the gold price is now back to levels seen in January last year, the dollar strengthened 13.2% during 2014, with almost all the gains coming since August.

Plotted against the greenback on the basis of the past correlation between the two, the price of gold may now be expected to be touching $1,100 as this graph from Saxo Bank suggests:

And The Second Best Performing Currency Of 2014 Is... Gold

Arguing that gold is not a currency?

GREENSPAN: Yes... Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.

Source: The Market Oracle

Gold Held In NY Fed Vault Drops To Lowest In 21st Century After Biggest Monthly Withdrawal Since 2001

Exactly one month ago we observed that, as expected in the aftermath of the Netherlands' shocking and still not fully-explained gold repatriation from the NY Fed, the amount of foreign earmarked gold on deposit with the Fed had just experienced a 42 ton withdrawal: the single largest outflow of gold held at the NY Fed in over a decade, going back all the way to 2001. This had brought the total amount of YTD gold withdrawals from the NY Fed to a whopping 119 tons: the most since the Lehman collapse.

However, because this total was insufficient to cover just the Dutch repatriation of gold from the NY Fed (which amounted to 122 tons), we knew there would be more activity when the November data hit. Sure enough, earlier today the Fed reported the total amount of earmarked gold (or gold "held in foreign and international accounts and valued at $42.22 per fine troy ounce; not included in the gold stock of the United States") for the month of November: at $8.184 billion, this was a $60 million drop from the previous month (or it would be at the $42.22/ounce "price"; at market prices the value of the withdrawn gold is about $1.7 billion).

In actual tonnage terms, this means that in November some 47.1 tons of gold were withdrawn from the NY Fed, bringing the Fed's total earmarked gold to just 6,029 tonnes: the biggest single monthly outflow going back to the turn of the century. This is also the lowest amount of gold held at the NY Fed vault located at 33 Liberty street (and just across from the even bigger vault located at 1 Chase Manhattan Plaza) in the 21st century.

But even more notable is that with the November data, we now know that all of the Dutch repatriated gold is fully accounted for.

Which brings up a far more important question: net of the Netherlands withdrawals, there is some 44 tons of extra gold that has been also quietly redeemed (by another entity). The question is who: is it now the turn of Austria to reveal in a few weeks that it too, secretly, withdrew some 40+ tons of gold from "safe keeping" in the US? Or was it Belgium? Or did the Dutch simply decide to haul back some more. Or did Germany finally get over its "logistical complications" which prevented it from transporting more than just a laughable 5 tons in 2013? And most importantly, did Germany finally grow a pair and decide not to let "diplomatic difficulties" stand between it and its gold?

We should have the official answer shortly, but we know one thing: it sure wasn't Ukraine.

Source:zerohedge

$ 1,200 gold price the new normal ?

After closing 2013 at $1,205 an ounce the price of gold jumped out of the starting gate, rising consistently to reach a high of $1,380 in March.

But the metal failed to consolidate gains during the summer doldrums, falling to a near four-year low November 6 at $1,143.

The recovery from there was swift and gold is heading into the final week of 2014 basically where it started the year.

Gold 2014's highs and lows were 20% or $237 apart, making it the quietest year since 2008. Last year it was 40% or $488 – gold's most volatile 12 months since crazy 1980.

Gold miners' problems are only exacerbated by falling by-product credits

The subdued trading in gold came despite potential market shocks including the slide in oil, the rampant dollar and a variety of geopolitical shocks during 2014.

The gold price is the most sentiment-driven of all commodities, but fundamentals still do matter.

And cost of supply may now be providing that elusive price floor gold bulls have been looking for since 2011's record high above $1,900.

As this chart by metals consultancy GFMS and Thomson Reuters shows towards the $1,100 mark, 60% of the industry would be loss-making on an all-in basis.

Gold miners' problems are only exacerbated say the authors by falling by-product credits, such as silver and copper which are down roughly one third and 10% respectively from the 2013 average.

Average costs in the industry sits around $1,200 and is falling as miners shelve projects, reduce exploration expenditure, defer or cut back on sustaining capital and a strong dollar helps to contain costs outside the US.

While the price may well fall to $1,100 in the year ahead, multiple quarters of prices at these levels would force loss-making miners out of business and reduce supply, helping prices to recover.

Renewed flight from gold ETFs

After a soft start to the week, the gold price jumped on Friday, coming close to retaking the psychologically important $1,200 an ounce level.

Gold's gains since hitting four-year lows early November are close to 5%, but the metal's resilience against a sliding oil price, a rampant dollar, record money flowing into equities and looming interest rate rises has not enticed investors to return to physical gold-backed ETFs.

Holdings in the bellwether exchange traded fund backed by physical gold, SPDR Gold Shares (NYSEARCA:GLD), fell by 11.6 tonnes on Monday, the worst performance in 18 months, and the sales continued in post-Christmas trade.

At the close on Friday holdings in GLD, which represents nearly 50% of the gold-backed ETF market, stood at 712.3 tonnes or 26.9 million ounces, the lowest since September 22, 2008.

Kitco quotes a research note from HSBC pointing to the risk to the gold price of continued ETF outflows:

"If ETF investors begin to liquidate more heavily, gold may be in for another round of declines," according to HSBC but the investment bank is not expecting further substantial selling during the holiday trading period.

After a positive start to December, this week's outflows have put GLD back in the red for the month with 5.3 tonnes of net redemptions.

The performance so far in 2014 is dismal with investors pulling just over 85 tonnes from the trust although outflows have slowed substantially from the 552 tonnes pulled from GLD in 2013.

Holdings in GLD peaked in December 2012 at 1,353 tonnes or 43.5 million ounces.

In November Barclays noted the risk to the early money invested in the dozens of listed gold-backed ETFs across the globe.

Almost 900 tonnes (700 tonnes on a net basis) were acquired between $900 – $1,000 an ounce.

If the gold price were to fall to $1,000/oz, an additional 100 tonnes would become cash negative according to the UK bank.

Gold price surges as stocks correct

The price of gold spiked as much as $44 an ounce higher in midday trade Tuesday on the back of another day of selling on equity markets and after finding support from a softer dollar and a stronger oil price.

On the Comex division of the New York Mercantile Exchange gold for February delivery was changing hands for $1,232.70 an ounce, up $37.80 or 3.2% from Monday's close.

The gold price jumped out of the starting gates on Tuesday rising to a high of $1,239.00 by 10am EST in heavy volumes of more than 20m ounces traded by noon.

Silver traders followed the gold market higher with March contracts adding over 5% to $17.11, down from a day high of $17.23 an ounce early on.

A correction on global stock markets – some say a long overdue one – after a relentless seven week rally to record highs in the US was the main factor behind gold's strength this week.

Gold's gains since hitting four-year lows early November reached 7.5% today while silver has advanced 10.6% over the same period.

While the drop in the Dow Jones and S&P500 indices was far from dramatic, Chinese stocks were hammered down 8% overnight on increasing worries about a slowdown in the world's largest economy and fears of a return to crisis mode in Europe after trouble in Greece and other peripheral economies saw equity markets in the trading bloc sell off heavily.

Gold has been uncharacteristically strong against a rampant US dollar which jumped to a more than 8-year high against the currencies of its major trading partners following Friday's blockbuster jobs report in the US.

Gold and the dollar usually move in opposite directions, and another retreat in the dollar index and slight improvement on oil markets on Tuesday provided additional support to the metal.

Gold's gains since hitting four-year lows early November reached 7.5% today while silver has advanced 10.6% over the same period.

Speculators in gold futures and options reduced their bearish bets on gold by 16% last week, cutting back shorts from near record levels reached in October and adding to long positions at the same time.

Net long positions held by large investors like hedge funds jumped to just over 79,300 contracts or close to 8m ounces in the week to December 2 according to Commodity Futures Trading Commission data.

Unlike hedge funds retail buyers did not increase their exposure to gold

That's more than double the number of bets that prices will rise held by speculators a year ago, when gold was hovering near the same levels.

Silver price speculators cut bets that the price will fall by 23% increasing their net long position substantially.

The rally in precious metals over the last month hasn't convinced investors in physical gold and silver-backed exchange traded funds however.

Unlike large investors retail buyers of gold remains negative about gold prospects and have been selling into rallies. The latest weekly data show the holdings of gold and silver ETFs dropping again.

Net sales were modest – only 4.6 tonnes – but did drop overall holdings back to five-year lows of 1,610.8 tonnes. Gold bullion holdings hit a record 2,632 tonnes or 93 million ounces in December 2012.

Outflows from gold funds are nowhere near as dramatic as 2013 when 800 tonnes were pulled out, but year-to-date gold ETFs have experienced outflows of 152 tonnes, an 8.6% drop.

Investors in silver continue to reduce their exposure to physical silver-backed ETFs which at the start of October reached a record 20,182 tonnes.

Last week 134.2 tonnes left silver funds reducing total holdings to 19,846 tonnes, but so far this year silver vaults have added 470 tonnes or 7.8%.

This is why India needs a gold policy — WGC

India, the world’s second largest gold consumer after China, should start a bullion board to regulate trade and a spot exchange to offer uniform prices across the country, according to the World Gold Council.

In a study published Tuesday, the market development organization for the gold industry outlines seven key policy recommendations to monetize the 22,000 tons of gold stocks kept by Indian households:

1.     Establish an India Gold Exchange to ensure pricing standardization, increase transparency and improve supply and demand analysis.

2.     Establish a Gold Board to manage imports, encourage exports and facilitate development of the infrastructure needed to ensure the Indian gold market functions to maximum effect.

3.     Develop accredited refineries in line with international standards including upscaling the current domestic refineries.

4.     Allow Indian banks to use gold as part of their liquidity reserves. This would incentivize them to introduce gold-based savings products.

5.     Drive monetization of gold by incentivizing banks, revitalize Gold Deposit Schemes, introduce gold-backed investment and savings products.

6.     Create a more active marketing strategy for Indian handcrafted jewellery. This could boost exports and highlight India’s expertise in this highly-valued sector e.g. by promoting handcrafted ‘India-made jewellery’ like the Swiss-made watches.

7.     Drive the standardization of gold so that buyers and sellers can have faith in both the quality and price of their products. Introduce guidelines for compulsory quality certification of all forms of gold to encourage accountability and foster an environment of trust.

The report also assesses the policies adopted in countries like Turkey and China, which have faced challenges similar to India, but chose to devise public policies to monetize the local stock of gold. Here, some of the key findings:

Gold hits 5-week high from early dive triggered by Swiss referendum

Gold prices experienced a dramatic comeback Monday after falling sharply in overnight trading due to Swiss voters unquestionably rejecting a proposal to boost the country’s gold reserves.

The precious metal traded as low as $1,141.70 an ounce overnight, bouncing back to a peak of $1,220 in early afternoon trading.

Spot gold climbed up 2.4% at $1,194.98, while U.S. gold futures for December delivery were up $18.20 at $1,193.70 an ounce.

A combination of factors worked to support gold Monday, including heavy short covering and buy stop orders triggered in the futures, and bargain hunting in the cash market.

A combination of factors worked to support gold Monday, including heavy short covering and buy stop orders triggered in the futures, and bargain hunting in the cash market. A weaker dollar and a recovery in oil prices also helped.

Some safe-haven buying also emerged after a downgrade of Japanese debt and weak manufacturing data around the world, market watchers said.

Gold had started the week in a frail note after the “Save our Gold” position was defeated in Switzerland’s referendum Sunday.

Proposed by the right-wing Swiss People's Party out of concern that the Swiss National Bank (SNB) has already sold too much gold, the measure would have compelled the bank to increase its gold reserves to 20% from around 8% it holds at the moment.

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Gold, Silver, Crude Prices approximate as of 2:40 PM Central.

Is the Bottom In?

These are enormous 1-day swings. Coupled with previous action, it's likely gold and silver have hit at least a short-term bottom, and likely much longer.

Swiss Gold Referendum Fails: 78% Vote Against "Protecting The Country's Wealth"

Whether as a result of an unprecedented scare campaign by the Swiss National Bank (most recently reinforced by Citigroup), or due to confidence that Swiss gold is as safe abroad as it is at home, or simply due to good old-fashioned "hanging chads", today's most awaited event has come and gone and the result - according to early projections by Swiss television SRF - is that the Swiss population overwhelmingly rejected a referendum to force the Swiss National Bank to hold some 20% of its reserves in gold in a landslide vote, with about 78% voting against what AP politely termed "protecting the country's wealth by investing in gold."

As Bloomberg reports, the proposal stipulating the Swiss National Bank hold at least 20 percent of its 520-billion-franc ($540 billion) balance sheet in gold was voted down by 78 percent to 22 percent, according to projections by Swiss television SRF as of 1:00 p.m. local time. The initiative “Save Our Swiss Gold” also would have prohibited the SNB from ever selling any of its bullion and required the 30 percent currently stored in Canada and the U.K. to be repatriated.

A map showing the breakdown of the Swiss vote by canton: none of the 23 Swiss regions had a majority vote for the gold initiative.

That said the decision will likley not come as a surprise because while early polls gave the yes camp a surprising lead, subsequently polling showed a marked shift in public opinion, and forecast the initiative’s rejection.

The biggest winner, of course, is the Swiss central bank: SNB policy makers warned repeatedly that the measure would have made it harder to keep prices stable and shield the central bank’s cap on the franc of 1.20 per euro. That minimum exchange rate was set three years ago, with the SNB pledging to buy foreign currency in unlimited amounts to defend it.

“The SNB can feel confirmed in its policy,” said Martin Gueth, economist at LBBW in Stuttgart. “By rejecting the gold measure, voters have come out in favor of its current stance.”

Referendums are a key feature of Switzerland’s system of direct democracy, and are held nationally and at a municipal level several times a year. The gold initiative was launched by a handful of members of the European Union-skeptic Swiss People’s Party. Uneasy about the more than 100 billion euros the SNB holds, they contend their initiative will strengthen -- not weaken -- the central bank’s credibility.

However, SNB President Jordan labeled the initiative “dangerous” and his fellow board member Fritz Zurbruegg said accepting the measure meant the room for maneuver “on currency reserves would be dramatically restricted, with negative consequences for the Swiss economy.”

The central bank, based in Bern and Zurich, would have faced a three-year deadline for repatriating its bullion from abroad and five to meet the 20 percent benchmark. With the European Central Bank poised to enact more stimulus to boost feeble growth and inflation, economists surveyed by Bloomberg News in a poll published on Nov. 19 had expected the SNB to maintain its ceiling on the franc into 2017.

The question now is what will happen to the Swiss France, which recently rose to a 26-month high against the euro. For many the concern that a successful gold referendum served as a catalyst to avoid going all in the CHF, as gold purchases would have weakened the currency. “If the euro crisis doesn’t get worse, then the minimum exchange rate will be defendable, said David Marmet, an economist at Zuercher Kantonalbank. Had the initiative been accepted, ‘‘instruments such as negative rates that don’t widen the balance sheet” would have been an option, he said.

With the referendum out of the way, the CHF may paradoxically find itself with a situation in which the inflows in the CHF force it to double down on defending the cap: economists have questioned whether the SNB will now find itself having to reinforce its cap with a negative interest rate on the cash-like deposits commercial banks keep with the central bank, making good on its threat to take further steps “immediately” if necessary.

And then there is the question of what happens to the tension in the gold swap market: as noted last week, the 1 Month GOFO rate had tumbled to the most negative in over a decade. It was not clear if this collateral gold squeeze was the result of Swiss referendum overhang or due to other reasons. The market's reaction on Monday should answer those questions.

India scraps gold import restrictions

The Reserve Bank of India has just announced on its website the scrapping of restrictions on gold imports, and the withdrawal of the so-called 20:80 rule which forces traders to re-export 20% of all imports.

The import curbs came into force in August 2013, to shore up the tanking rupee and tackle the country's current account deficit which had ballooned to 5.5% of GDP.

The surprise decision – most observers were calling for a tightening – did little for the price of gold in New York, which was last trading down nearly $20 an ounce at $1,178 an ounce, the lowest in more than two weeks.

Although details of the move still has to be disclosed it's likely that the precipitous fall in the price of oil – India's top import ahead of gold – played a role.

Indian gold imports have surged recently, but the decline in crude price will soften the impact should Indian traders continue to ramp up purchases.

CHART: Another huge Friday gold price takedown

After an uneventful week where gold stayed within striking distance of $1,200 an ounce, Friday saw another big move in the price in heavy volume.

The first gap down came right at the open, when a huge sell order of more than 1.2 million ounces dropped the price out of it's trading range.

Then around mid-day another series of trades took the price down to a day low of $1,163.90, a drop of 2.8% from yesterday's close.

For the session volumes were heavy with the most active contract trading the equivalent of 24 million ounces, almost double the three-month average.

A freefall in the price of oil – down 10% on the day – and doubts about the outcome of the Swiss vote on the country's gold reserves could partly explain the drop.

But the surprise scrapping of import duties by top gold consumer India should have buoyed the price. Even before the lifting of the curbs, India's import of gold rocketed and providing a floor for the physical market.

By the close of trade on the Comex division of the New York Mercantile Exchange gold for February delivery was changing hands not far off the lows at $1,165.80 an ounce, down $31.70.

Something Appears To Be Going On With Gold

Something appears to be happening to gold. That something is either China finally revealing its true gold inventory, which is unlikely, or, more likely, the biggest fat finger in the history of gold, as a liquidity testing algo goes absolutely insane in the pre-open period (and loses its job on the BIS' payroll). Or, most likely, just an ongoing bad print.

... and the algo, or the bad feed, or whatever, keeps going. $1400 now.

And... CTRL-Z. The liquidity test is complete as electronic market reopens for trading.

And for those curious to find out what happened, speak to the programmer of whatever the liquidity test was that moved gold higher by $0.10 every second in 1 contract in a diagonal fashion.

Everything You Need to Know About The Swiss Gold Referendum

On November 30, Swiss nationals head to the polls on three separate issues: abolishing a flat tax on resident, non-working foreigners, an immigration cap, and a proposal on Swiss gold reserves. As Visual Capitalist notes, the one we are most interested in is the latter section of the ballot, and today’s infographic sums up everything you need to know about the upcoming Swiss gold referendum.

The referendum, if passed, will mean that (1) The Swiss National Bank must hold 20% of all assets as gold, (2) Switzerland will repatriate the 30% of their gold held abroad by England and Canada, and (3) Switzerland may no longer sell any gold they accumulate.

In the most recent polling, 38% of respondents supported the initiative, 47% were against, and 15% were undecided. The poll has a 3% margin of error as well. While support is down from the previous poll, anything is still possible on November 30th.

Switzerland currently holds 1,040 tonnes, or 7.7% of its reserves in gold. The country actually holds the highest amount of gold per capita (4.09 oz per citizen). However, it used to be an even bigger holder of the yellow metal. In 2000, the SNB held 2,500 tonnes of gold and it has also been the biggest national seller since.

The implications of the vote are huge. With a “yes”, the SNB would have to purchase at least 1,500 tonnes of gold to meet the 20% threshold for 2019. That’s about half the world’s annual production. It would also put Switzerland back in the top three for most gold holdings worldwide.

Courtesy of: Visual Capitalist

India may restrict Gold imports

The world's biggest bullion consumer India’s Ministry of Finance may announce measures to restrict gold imports, said. 

Citing industry sources, Commerzbank said the Reserve Bank of India is strongly supportive of new import restrictions following news that the value of gold imports in October soared by 280% year-on-year to $4.2 billion. 

“That said, this is partly due to a base effect. Any further limitation of gold imports would probably also lead to increased smuggling, which cannot be the Indian government’s intention. In addition, Indian jewelry retailers could increasingly resort to silver,” 

Another curve ball for Indian gold demand
According to ETF Securities, after loosening some of the restrictions on gold imports in May, the Indian government may re-tighten amid a strong resurgence in gold import demand. The Finance Ministry and central bank met last week to discuss without a decision, agreeing to reconvene soon. 

ETF Securities believes the short-term impact of the discussions will be for consumers to increase purchases before any re-tightening. Historically, tighter restrictions have led to the price of gold being substantially higher in India than elsewhere. 

Higher premiums that could follow a potential tightening of restrictions will how ever dampen demand going forward, reducing come of the support for the gold price in 2015.

Since 2011, India and China have been locked in a contest to become the world’s biggest consumer of gold, a position that Asia’s third largest economy recovered recently.

According to World Gold Council, for the three months ending September, India emerged as the biggest gold consumer in the world, buying 225.1 tonnes worth gold in jewelry, bars and coins.