Gold may have its worst week in 2012 as it is currently down 3.5% for the week in dollar terms and nearly 3% in euro and pound terms. However, gold is still higher so far in June and the fundamentals suggest we have bottomed or are very close to a market bottom prior to a summer rally.
However, further short term weakness is possible as speculators go to cash and support is at $1,540/oz (see chart above).
The IMF data on central bank demand in January showed that Sweden raised its gold reserves by 18.3 metric tons to 144 tons in January. The data on the International Monetary Fund’s website was gold bullish showing continued demand for gold by central banks internationally. Belarus added 5 tons to reserves, Kazakhstan raised reserves by 7.6 tons and Turkey increased gold reserves by 4.1 tons. They were two quite odd minor reductions in gold reserves. Mexico reduced bullion reserves by 0.1 ton and Tajikistan cut them by 0.3 ton, according to the IMF. However soon after the increase in Sweden’s gold reserves was reported by Bloomberg, Sweden’s central bank gold reserves contradicted the IMF data and denied that they had increased their reserves. Joanna Gerwin, acting head of communication for the Riksbank, told Bloomberg that Swedish gold reserves were unchanged at 125.7 metric tons in January. Officials at the IMF’s office in Paris said nobody in Europe was able to comment. Alistair Thomson, a spokesman for the IMF in Washington, didn’t immediately reply to a voicemail and e-mail from Bloomberg outside normal business hours. Interestingly, the Riksbank sold 36.6 tons under the Central Bank Gold Agreement (CBGA) from 2007-2009. An increase in reserves of 18.3 tonnes is exactly half of the amount sold and would mean that the Riksbank had bought back half of the gold sold from 2007 to 2009.