From Adrian Ash<\/p>\n
\nBullionVault<\/a><\/p>\n \n\u201cOverblown\u201d as Chinese & Indian Demand Surge with Economies<\/strong><\/p>\n \n <\/strong><\/p>\n PHYSICAL WHOLESALE MARKET <\/strong>prices to buy gold<\/a> held firm in London on Friday morning, nearing the end of what one London trader called \u201canother roller-coaster week\u201d some 1.7% lower for Dollar and Sterling investors but little changed vs. the single Euro currency.<\/p>\n \nFriday morning’s London Gold Fix<\/a>, set at $1390 per ounce, was some 2.5% below Tuesday’s new all-time record high.<\/p>\n \nJapanese equities meantime ended the week unchanged, but Germany’s Dax index crept back towards two-and-a-half year highs, while Wall Street’s Nasdaq tech-stock index was set to open near 3-year highs.<\/p>\n \nMajor-economy bonds steadied, holding yields just below this week’s 6-month highs, as US Treasuries headed for their worst weekly loss of 2010.<\/p>\n \n\u201cWe expect sellers of the metal near $1400,\u201d says gold bullion<\/a> market-market Scotia Mocatta’s short-term trading note.<\/p>\n \n\u201cThe US interest-rate decision [next Weds] could give direction to the US currency and thus most probably have an effect on gold\u2019s trajectory,\u201d says Swiss refinery group MKS’s trading desk.<\/p>\n \n\u201cThere has been an underlying shift to gold as an alternative currency,\u201d said a London\u00a0 gold bullion<\/a> trader to Reuters, \u201cwith both the Dollar and Euro weak, and a lack of confidence in global banking.\u201d<\/p>\n \nBut while \u201ca general distaste for and distrust of fiat currencies and fears of future inflation [has] intensified investors\u2019 desire to hold physical commodities,\u201d says Mitsui analyst David Jollie, \u201cthe description of gold as a currency rather than a commodity seems overblown, given the similar performance of copper.\u201d<\/p>\n \nBoth copper and gold prices<\/a> have risen around 28% so far this year. A group of London metal traders last month wrote to City watchdog the FSA last month to warn that licensing exchange-traded investment funds \u2013 backed by physical copper stockpiles \u2013 may mean \u201capproving the next financial bubble.\u201d<\/p>\n \nJ.P.Morgan has already received US regulatory approval for its forthcoming copper ETF<\/a>, with competing products expected from BlackRock iShares, Deutsche Bank and ETFSecurities amongst others.<\/p>\n \n\u201cOutput shortages of 800,000 metric tons may occur in 2011 and in 2012, compared with a balanced market this year, \u201c says Bloomberg, quoting Trafigura Beheer BV, \u201cwhich considers itself the second-largest trader of industrial metals.\u201d<\/p>\n \nNew data from China today showed copper imports to the world’s fastest-growing economy rising 29% last month from a 1-year low, while its crude oil imports rose 26% from Oct.<\/p>\n \nCrude oil prices today ticked higher above $88 per barrel, while copper held near Thursday’s new record highs.<\/p>\n \n<\/a><\/p>\n \nSilver prices<\/a> briefly touched $29 an ounce for the second day running.<\/p>\n \nRubber prices hit fresh 30-year highs. Heavy rains in southern Australia led ANZ Bank to warn that 60% of the country’s wheat crop may be cut to animal-feed quality.<\/p>\n \n\u201cWe think the threat of bubbles is greatest [not in emerging economies but] in commodity markets,\u201d says Capital Economics\u2019 chief international economist in London, Julian Jessop.<\/p>\n \n\u201cThe prices of industrial metals and agricultural commodities have already returned to the pre-crisis levels of 2008 \u2013 levels which were only achieved after the world economy had been booming for four years.\u201d<\/p>\n \nAlready the world’s No.1 importer<\/a> of copper and the No.1 consumer of energy, rice and wheat, China may become the world’s No.1 corn importer within five years, reckon analysts at Rabobank, as rising meat consumption demands increased pig and poultry production.<\/p>\n \n<\/a><\/p>\n \nGold bullion<\/a> imports to China have jumped 5-fold so far this year, reaching more than 200 tonnes according to the Shanghai Gold Exchange.<\/p>\n \nNow the world’s largest single gold mining<\/a> nation, China does not allow large-scale exports of its near-300 tonne output.<\/p>\n \n“Tighter global monetary policy is bad for gold, and this is tighter monetary policy,\u201d said Japanese conglomerate Mitsubishi’s chief analyst Matthew Turner today, commenting on China’s latest increase in banking reserve ratios \u2013 the sixth such hike of 2010.<\/p>\n \n\u201cBut [it’s] only slightly [tighter], and in one part of the world, so the impact is not huge.\u201d<\/p>\n \nDemand to buy gold<\/a> from Indian clients was the strongest mid-week since late Oct., just before the peak Diwali festival, Swiss bank UBS’s London office reported today.<\/p>\n \nBack then, \u201cGold was trading around $1320,” notes UBS chief analyst Edel Tully. Gold prices<\/a> this week dipped below $1380 an ounce. \nBullionVault<\/a><\/p>\n \nGold price chart, no delay<\/a> |\u00a0\u00a0 Buy gold online at live prices<\/a><\/p>\n \nFormerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash<\/strong> is the editor of Gold News<\/a> and head of research at BullionVault<\/a> \u2013 winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council<\/a> research body \u2013 where you can buy gold today<\/a> vaulted in Zurich on $3 spreads and 0.8% dealing fees.<\/p>\n
\nNew data today showed India’s industrial production growing by nearly 11% in Oct. from a year earlier. Twenty-nine economists surveyed by Bloomberg News forecast an average rise of 8.5%.
\nAdrian Ash<\/p>\n