Gold To Repeat April, May And Q2 / Q3 2011 Gains In 2012?

Tyler Durden's picture

From GoldCore

Gold To Repeat April, May and Q2 / Q3 2011 Gains in 2012?

Gold’s London AM fix this morning was USD 1,670.50, EUR 1,269.86, and GBP 1,048.91 per ounce. Yesterday's AM fix was USD 1,655.50, EUR 1,261.33 and GBP 1,039.04 per ounce.

Silver is trading at $32.39/oz, €24.53/oz and £20.27/oz. Platinum is trading at $1,597.50/oz, palladium at $644/oz and rhodium at $1,350/oz. 

Cross Currency Table – (Bloomberg)

Gold rose $17.10 or 1.03% in New York yesterday and closed at $1,675.20/oz. Gold rose sharply in just a few minutes of trade on heavy volume - about 33,000 contracts between 1430 and 1500 GMT. Gold traded erratically but essentially sideways in Asian trading prior to ticking lower in Europe. 

Weaker gold prices are being attributed to China's weaker than expected Q1 GDP data. However, Asian equity indices were higher.  A slightly stronger U.S. dollar and oil prices back below $103 a barrel (NYMEX) may be contributing to today’s weakness.

China's GDP grew 8.1% which was well below expectations - expanding at its slowest pace since Q1 2009. GDP growth slowed from the 8.9% rise in Q4 of 2011 and was below the average forecast from economists polled by Dow Jones, Bloomberg and Reuters.

The North Korean rocket launch may have led to a safe haven bid which was taken out of the market after the rocket failure.

Gold bullion remains supported, mostly due to a pickup in physical Indian and Chinese gold demand this week. There are expectations of sustained Indian consumption next week in the lead up to the Akshaya Tritiya festival later this month. 

Western physical buying remains unusually anaemic - for now.

In recent years, April and May have been positive months for gold in terms of returns (see table above).

April has returned 1.4% per annum in the course of the current bull market since 2000. 

May has returned 1.75% per annum in the course of the current bull market since 2000.

Interestingly, the last month of Q1 and Q2, March and June, have been negative in terms of returns.

March in particular has seen the poorest returns for any month in the last 11 years with average falls of 0.6%. 

Therefore the very poor performance of gold in March 2012 (-6.4%) may represent another buying opportunity as it did last year (see chart below) and in previous years.

Gold Daily 2 Year Chart – (Bloomberg)

Gold traded marginally lower last March prior to sharp gains in April 2011 when gold rose 8% (silver rose 28%).

This was followed by a correction in May and consolidation in June prior to further sharp gains in July and August.

Looking at the quarterly performance of 2011, gold traded marginally higher in Q1 prior to gains in Q2 and then strong gains in Q3.

Bullion then encountered a sharp correction and consolidation seen at the very end of Q3 which continued into Q4.

This continued in Q1 2012 but the gains in Q1 2012 (6.7% gain in Q1) were important and make the long term technicals favourable again.

While past performance is no guarantee of future returns, these are monthly, quarterly and seasonal patterns that are worth considering and suggest that diversifying on the dip remains prudent.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

(Bloomberg) -- Gold Set for Rebound With Support at $1,600: Technical Analysis 
Gold may rebound in April from two straight monthly declines as the metal has so-called support at $1,600 an ounce, according to a technical analysis from Haitong Futures Co., a unit of China’s third-largest listed brokerage.

“The long-term chart shows the underlying uptrend hasn’t been broken,” Dong Zhuying, an investment consultant at Haitong, said by phone from Shanghai today. “We think gold is ready for a rebound.”

Dong used a straight, upwardly sloping line that touches the lowest gold prices going back to 2008. Support levels are marked by clusters of buy orders, according to technical analysts, who say that past moves may be used to predict trends.

While bullion has rallied 7.1 percent this year, extending an 11th year of gains, it fell 4 percent in February and March on reduced expectations that central banks will add further stimulus to boost growth, cutting haven demand. Spot gold traded little changed at $1,675.02 an ounce at 11:22 a.m. in Singapore.

“Gold has found quite solid support at $1,600, and could rally toward $1,800 if it pushes firmly past the psychological $1,700 mark,” said Dong. “A head-and-shoulders pattern may be forming and this could potentially be bullish.”

That pattern is formed over time as an asset makes three consecutive peaks, with the middle being the highest. The February peak of $1,790.75 -- this year’s high -- may be the initial shoulder, according to Dong. 

(Bloomberg) -- Gold at $2,000 ‘Out of Reach’ This Year, Credit Suisse Says 
Gold’s previous high of $1,921 an ounce will remain a “formidable barrier” and $2,000 will be “out of reach” this year as the U.S. economy extends a recovery, according to Credit Suisse Group AG, reiterating a call made in January.

The bank left its quarterly forecasts unchanged, and expects gold to average $1,720 in the second quarter, $1,810 in the third quarter, and $1,840 in the fourth quarter, analysts including Ric Deverell and Tom Kendall wrote in a report today. 

(Bloomberg) -- Citigroup Countersued by Rajaraman in Singapore Over Gold Losses 
Citigroup Inc.’s Singapore unit was countersued by Raghavendran Rajaraman, who claimed the bank breached an agreement by prematurely selling his gold assets held as collateral and closing his trading account.

Citigroup induced and instigated Rajaraman to apply for the maximum $50 million credit facility and then violated an agreement by not giving him ample time to “regularize” his account when gold prices fell in September, he claimed in papers filed at Singapore’s High Court. A closed hearing is scheduled for today.

Rajaraman is seeking damages including bullion valued at $1.75 million he used as collateral and that the bank sold when it liquidated his account. He’s also seeking unspecified lost profits, according to the filing.

Citigroup had sued Rajaraman, a former currency options trader with the bank until 2007, in a bid to recoup trading losses the bank says he incurred after gold fell from a record high in September. Rajaraman had gold valued at $19.2 million, in addition to the bullion used as collateral, leaving a $1.03 million shortfall, according to Citigroup’s complaint.

The loss suffered was “entirely caused” by Citigroup improperly closing out his trading positions, Rajaraman said in court papers. He denied giving the bank instructions or consenting to close his positions or sell the gold, according to the countersuit.

Adam Abdur Rahman, a Singapore-based Citigroup spokesman, declined to comment. Rajaraman’s lawyer Kelvin Chia didn’t respond to an e-mail or return a call seeking comment.

Hedge Fund

Rajaraman denied the bank’s claim that he was a hedge fund manager at 3 Degrees Asset Management. He didn’t provide his current employment details, in the court filing.

Citigroup, in response to the countersuit, said Rajaraman applied to increase his credit line out of his “own volition and on his own judgment.” Rajaraman’s credit facility was raised to $20 million instead of the $50 million sought, according to the court papers.

A disclosure form signed by Rajaraman didn’t constitute an agreement or have any contractual rights, the bank said, denying that it had breached any agreement with him.

Rajaraman had also consented to the bank selling his gold assets, according to Citigroup’s filing.

Gold plunged 11 percent in September, the most since October 2008, after futures reached a record $1,923.70 an ounce on Sept. 6. Spot gold was at $1675.18 an ounce at 6:30 a.m. Singapore time.

The case is Citibank Singapore Ltd. v Raghavendran Rajaraman S826/2011 in the Singapore High Court. 

(Bloomberg) -- South African Mine Production Drops Most Since March 2008
South Africa’s drop in mining production in February, the biggest monthly decline in almost four years, may boost prices of platinum-group metals in the near term, BMO Capital Markets Ltd. said.

Total mining output retreated 14.5 percent from a year earlier, the most since March 2008, Pretoria-based Statistics South Africa said in a statement today. Mines produced 48 percent less platinum-group metals because of a strike at the world’s biggest platinum mine and safety-related shaft closures.

“Such a decline in production from South Africa has a material impact on the global supply-demand balance, which could be positive for near-term PGM prices,” Edward Sterck, analyst at BMO Capital Markets, wrote in an e-mailed note. South Africa produced about 75 percent of global primary platinum supply last year, according to BMO.

Workers at Impala Platinum Ltd.’s Rustenburg operation downed tools on Jan. 20 in a dispute over pay. The mine restarted on March 5 and is still ramping up to full production.

“The biggest reason for the decline was the strike at Implats,” Juan-Pierre Terblanche, a spokesman for the statistics office, said by phone. “We’re expecting the figures for March will also be low,” he said. Safety stoppages also contributed to the drop in platinum and gold output, he said.

Gold production slumped 11.5 percent, Statistics South Africa said.

Mine Deaths

Mines in Africa’s biggest economy are facing increasing safety inspections and work stoppages as the Department of Mineral Resources works to cut fatalities, which stood at 123 last year. The platinum industry lost an estimated 300,000 ounces of production last year because of safety stoppages, Anglo American Plc said Feb. 17.

Platinum fell 9.1 percent to an average of $1,658.86 an ounce in February, from a year earlier. Platinum-group metals are typically found and mined together and consist of platinum, palladium, rhodium, iridium, osmium and ruthenium.

Gold rose 27 percent to an average of $1,741.43 an ounce in the month from a year earlier.

The retreat in platinum-group metals production contributed 12.6 percentage points to the decline in total mining output, Statistics South Africa said in the report. 

(Bloomberg) -- Silver Prices May Drop to $22 An Ounce This Year, CPM Says
Silver prices may fall to as low as $22 an ounce this year an investment demand declines because of high volatility and as buying from fabricators wanes, Jeffrey Christian, the managing director at CPM Group Inc., said in an interview in New York today.

(GoldCore Editors Note: CPM’s Jeffrey Christian’s track record with regard to forecasting the silver price is poor and he has been bearish nearly every single year since 2003).

Gold edges down after China data boosts dollar - Reuters

Gold, silver fall as China’s economy cools - MarketWatch

‘Sticky’ Gold ETP Investors Holding Gold – The Financial Times

Singapore's SMX to launch new gold, silver futures - Reuters

Crisis Gets Personal After U.K. Traders’ Spread-Better Fails - Bloomberg

QE to Infinity is as Sure as Death and Taxes – Jim Sinclair MineSet

Mauldin - Europe is Destroying Their Currency – King World News

Morgan Stanley's Failure To Segregate Client Assets Creates Default Risk – Seeking Alpha

The War at the End of the Dollar – Financial Sense

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
prole's picture

Western gold buying anemic? Well snap to it Sheople!

Levadiakos's picture

I am a big buyer of cash

Pullmyfinger's picture

Anemic because the MF Global affair left a very, very bad smell. Even with the reduction in margin requirements on Monday, the whole issue of 'buying' precious metals via etf's is problematical.

Pullmyfinger's picture

--and parenthetically, isn't the implication of 'gold-buying Sheople' an oxymoron?

prole's picture

That's alot of fancy high-falutin words you use there Pilgrim.

Bravo Tango Foxrot Delta

covsire's picture

Why does gold always drop whenever Zerohedge talks about it rising? I swear, like clockwork, everytime I click an article talking about the rising gold price, it just suffered a meat cleaver attack by crazed trader zombies that just took off it's head and stopped it's advance.

lenitivelea's picture

maybe the algo's run on reverse social trading ^.^

LongSoupLine's picture

long GLD May calls.  Profit to be rolled into physical.


sink the Comex!

bigdumbnugly's picture

cme lowering margin on silver news posted on zh around 6:30 pm yesterday.  not much response in price since.  so either that news was leaked  way beforehand (surprise surprise) and whatever bounce there was to get was put in earlier that day.  OR folks just aren't too ready to entrust their funds with them amymore.

Zero Govt's picture

there has been a response to the CME dropping their knickers in desperation to drum up some biz post-MF Global scandal and the 2011 Silver cartel/crooks smackdown

Silver down almost -2%

Gold down almost -1%

the CME have got to be the biggest bunch of jokers ever to (mis)manage an Exchange, their ever-changing margin policy is like watching Ronald McDonald play with a fuking Yo-Yo

..whatta bunch of jerks

apberusdisvet's picture

World production falling or at best stable, with more countries engaging in de facto or de jure nationalization, thereby keeping product off the market.  What's not to like about gold's prospects?

dereksatkinson's picture

As long as Gartman stays bearish...  Absolutely nothing.

akak's picture

Don't forget Nadless!

Who never met a gold price decline that he didn't like (and crow about).

I'm still waiting for the permanent decline in gold to the sub-$800 level that that pro-bankster mouthpiece has been warning about for over four years now.

rokka's picture

Instagram returned in 1.5 year how much they are saying

atlee's picture

what? I thought it was going vertical

onebir's picture

What happened to the Indian rebound buying at the end of the gold-dealer's strike?

Zero Govt's picture

don't listen to those hopium junkies at King World News

..they'd think Marlborough putting gold paper in their fag packets was positive for the Gold price

francis_sawyer's picture

Yawn... keep stacking... yawn again...

disabledvet's picture

Food riots globally "as Americans continue to deal (ineffectually) with an obesity epidemic." wait till the price of booze starts collapsing...

SheepDog-One's picture

I keep hearing about this horrible 'obesity epidemic' that apparently plagues America, but I dont really see it myself. Maybe its just where I live, but I really dont see the streets clogged with obese people at all.

Gazooks's picture

go to the nearest wal-mart

bigdumbnugly's picture

of course everything is relative.  maybe sheep's real identity is one of these guys???


jk, sheeep...    i hope.

Seorse Gorog from that Quantum Entanglement Fund. alright_.-'s picture

This is why ZeroHedge is so educational. I am a wiser man now. Thanks.

SheepDog-One's picture

No Im actually 5-10 and 170 pounds, a competitive cyclist, I live in Boulder Colorado and like I say I keep hearing about this 'obesity epidemic' but I dont see any obese people around here its all healthy lifestyles and bicycle races so maybe you all need to come out here.

gmrpeabody's picture

Come to the Great NW, the other hippie Mecca, where they race their tax payer provided electric fat chairs so they can drive to the nearest fast food store without having to stand.

SheepDog-One's picture

Well thats just what Im saying, Gazooks, its probably due to where I live, and even if there was a Walmart here I'd never go to it.

SheepDog-One's picture

Oh I see, so Im supposed to go seek out obese people in New Jersey or Cleveland? Gee, thanks but no thanks, I guess I'd rather be where I am now where seeing obese people is a rarity. Anyway, have fun at Walmart, seems all you Zerohedgers are quite familiar with it.

gmrpeabody's picture

Sheep, do you compete in Meeker each year with your fellow dogs?

flacon's picture

Well you should visit Philadelphia, or Trenton, or Camden....

SheepDog-One's picture

Well apparently all you guys hang around Walmart all day, frankly I wouldnt go there if you paid me to do it.

prole's picture

Brother I was just there yesterday Benny bux in hand~!

I am the Walmart nation! (minus the extra 150 lbs)

Let's keep it real Sheep-dog, you're not going to find the obese at a Triathlon in Boulder, try a Cheesesteak festival in Philly, you'll see how the other half lives, and eats (If you survive the gunfire)

ArrestBobRubin's picture

Yes, and as usual, the cartel has allowed no overnight follow though on yesterday's moment of sanity in the paper pm markets.

Who cares? Phyzz staying nice and cheap with this wonderful subsidy the Fed and Treasury are giving us via Blythe and JPM's "balanced book"

Thanks f*ckwits!

ArrestBobRubin's picture

While most of my weight is in non-specialty silver, one exception I've made is the Canadian Wildlife series. No, not the Cougar- - the T-wolves, Grizzlies, and Moose. The T-wolves I purchased when they were first issued are now $65 ea, when you can find 'em. The Grizz is already mid-40's. Moose is new, you can get these just above the cost of an ASE or CSM. See these other choixces in the right margin of the Moose page below. These are limited edition coins whose value should remain above standard Maples.

With where we know silver is going over time, even the T-wolves at $65 will seem a stooopid bargain...

Provident Metals has the series and are a very efficient and reliable dealer. Not my primary but I buy there.  One thing I really appreciate, they don't whack you on shipping (hello APMEX)...

Good hunting

Non-overlappingMagicCereal's picture

I'm curious what gold-standard advocates make of the idea that demand from China and India is driving up prices so steadily and significantly.  If a currency were backed by gold, wouldn't such price increase be precisely equivalent to back-breaking deflation?

Pullmyfinger's picture

Want a real education on the relationship of gold to money? Spend some time here:



Non-overlappingMagicCereal's picture

I do not have the attention span for many pages of random-anonymous-blogspot-guy.  I'm more interested in the specific question of whether such appreciation is deflationary for the currency it backs.  After all, if one can achieve significant returns just by storing their currency under a mattress, what would be the incentive to loan at anything other than usurious rates?  This, I understand, is why we target 2% inflation.  With deflation, whither home loans, small business loans, student loans, even VC?

jomama's picture

FOFOA is far from your average blogspot guy.  Another good read is Jesse's Cafe American.  

If someone laid out the answer to your question and was completely accurate, you wouldn't need to read ZH, now would you?

Non-overlappingMagicCereal's picture

Fine, I read it, and though I admit it wasn't a total waste of time in general it does not remotely answer my question (nor does the site to which you linked).  My understanding is that steady, signifcant appreciation in real terms of an asset backing a currency would be disastrously deflationary for that currency (disincentivizing both lending and investment in general), and I was curious if someone could poke a hole in that assertion.  The answer, at least around these parts, appears to be no - although I'm not holding my breath for anyone to admit it, the more popular option appears to be referring me to unrelated material with the vague hope that someone else has the answer.

Pullmyfinger's picture

"disasterously deflationary for that currency"??

What are you smokin'? A currency that is inflating is losing value; thus a currency that is deflating is gaining in value. Who doesn't want the buying power of their money to increase? And in what way is that "disasterous"? Sorry, but no wonder you have questions... : )

Non-overlappingMagicCereal's picture

Sorry, poorly phrased - I meant to say for the country or economy that uses that currency, and for precisely the reason you state.  If the currency is gaining value all by its lonesome, why invest or lend?

Pullmyfinger's picture

This is essentially derived from the logic of mercantilism, wherein exports appear to be the only essential means of obtaining more gold (or its current surrogate). But this philosophy serves only the upper social strata. To the rest of society, who can easily form a self-contained economy if not disrupted by this "1%", a readily available, valuable currency is highly desireable and a measure of a healthy civilization. For example, imagine a monetary system in which a 'dollar' was fixed to say, one hundred kilowatts of electricity, and there were no taxes whatsoever levied on any portion of the electrical generation industry. An economy modeled in principe after a self-exciting dynamo is set in motion, in which a valuable currency was produced in ever-expanding amounts --without inflation.

I suppose this is too much of an answer.. : )

Non-overlappingMagicCereal's picture

I do not understand how this point relates to the gold standard, and the presence of deflation if increasing demand from the developed world outstrips increasing supply.  That is what I'm interested in - is this related?

lookma's picture


Without a certain weapon in the arsenal of the euro's design, the foreign CBs would indeed be over a barrel. Previously they were forced to evermore be on a dollar standard, since they would realistically only opt for this as the lesser of two evils. The alternative of saying no to the dollar at that time, would only have meant a return to a gold standard, and the politically unacceptable bone-crushing depression that would follow (as well as instability). In 1979, the European CBs began marking their gold reserves to market. This one act demonstrated immense foresight, and would provide the escape valve from the rock-and-hard-place no-win choices between eternal dollar support, or global depression.