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April 23, 2013

Release Date: 
Tuesday, April 23, 2013

Gold prices retreated on the New York Spot Market on weak economic news from China and a stronger dollar although prices remained above $1400. Silver prices were also lower. You can see the most current spot prices here.

Physical demand continues to support gold prices, helping gold to recover some of its earlier losses. "I think the most important thing is there's been a marked reaction by consumers and retail investors to the drop in price. It's mostly, but not entirely, from the emerging world," said an HSBC chief commodities analyst. "But China and India combined have lot of buying power. It's quite fragmented. It's very much at the retail level. It's literally consumers reacting through coins and small bars. It's really a major driver in us going $100 above the low." (“Gold May Have Hit Bottom, for Now,” CNBC, 4/22/13.)

The U.S. Mint announced that it was suspending sales of its smaller gold coins. “While the one ounce gold bullion coins remain the most popular, demand for the one-tenth ounce coins has remained strong too, with year-to-date demand for these coins up over 118% compared to the same period last year,” the Mint wrote to authorized purchasers. “Accordingly, the United States Mint has temporarily suspended sales of its one-tenth ounce gold bullion coins while inventories can be replenished.” (“U.S. Mint Suspends Sale of Smallest Gold Bullion Coin,” WSJ, 4/23/13.)

Goldman Sachs, whose earlier recommendation that clients short gold prompted the recent selloff, has now advised clients to close out their short positions. (“Goldman Cuts Commodity Outlook as It Exits Bet on Gold Drop,” Bloomberg, 4/23/13.) "That kind of in itself puts a bottom on gold temporarily at $1,400," said a senior commodity broker with RJO Futures. (“Gold Pares Losses On Goldman Call, Strong India Demand,” WSJ, 4/23/13.)

Credit rating agency Fitch Ratings downgraded the Great Britain’s credit rating. Fitch projects the UK’s “general government gross debt would hit 101% of GDP before it begins to fall (by contrast nations with the top AAA rating are at about 50%). Further, the nation still struggles from higher-than-projected budget deficits)…”  (“U.K. loses top Fitch rating on weak economic view,” MarketWatch, 4/23/13.) Last week, Germany’s credit rating was downgraded by Egan-Jones Ratings Co. due in part to its exposure to growing debt-to-GDP ratio.

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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