Russia Buys 0.5 Million Ounces and Bank of Korea “Needs To Buy More” Gold
In volatile up and down trade, gold dropped for its 3rd day after Bernanke and the Fed failed to announce the latest round of QE.
The Fed did expand "Operation Twist" by $267 billion and will continue it to the end of 2012, instead of expiring in June which was gold bullish.
Therefore, the sharp fall in gold and then even sharper rise and then fall again was unusual trading.
It appeared that an entity, possibly a large institution, wished to have gold close lower on the day and there was high volume selling at the $1,620/oz mark which capped prices.
Bernanke said the central bank was concerned Europe's prolonged debt crisis was dampening U.S. economic activity and employment.
Lower gold prices allowed jewellers and gold brokers in Asia and central banks to buy on the dip.
“The physical market noted buying interest overnight and today,” according to Reuters.
While a Reuters poll shows that Wall Street bond firms feel there is a 50% chance of the Fed launching QE for a third time, we continue to believe that QE3 continues to be inevitable.
The Russian central bank has again increased its gold reserves by 500,000 ounces.
Bank Rossii announced that it had increased gold stocks in its international reserves by 0.5 million troy ounces to 29.3 million troy ounces in May from the end of April.
Russia's gold and foreign exchange reserves declined to $512.2 billion in the week ending June 15 from $512.4 billion a week earlier. Russia’s reserves remain very sizeable and have increased in 2012 as they were at $498.6 billion at year end 2011.
Source: GoldSeek.com, 22 June 2012