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Central Banks Continue to Acquire Gold

Release Date: 
Tuesday, April 24, 2012

The price of gold was higher today on a lower dollar with gold trading up $10 per ounce as of 7:08 AM Pacific Time on the New York Spot Market and silver at $31.21 per ounce.

The dollar moved lower after news that new U.S. home prices dropped sharply in February, reaching the worst level in nearly a decade. The Case-Shiller index of 10 major metropolitan areas fell 0.8% in February. The 20-city index was also down 0.8% from the prior month. The U.S. housing market has struggled to recover despite buying incentives such as lower home prices and historic low interest rates.

Data from the International Monetary Fund (IMF) indicate that Russia, Mexico and Argentina increased their gold reserves. "The confirmation of official central buying should help gold find some stability today," UBS said in a note. "With positioning light, participants could certainly use this as an excuse to become a little friendlier towards the yellow metal," analysts said. "But this sentiment is likely to be put on hold until the FOMC meeting is out of the way tomorrow," UBS added. "After all, Fed-speak still remains the largest determinant of gold's direction for now."

(Source: "PRECIOUS-Gold edges above $1,640/oz ahead of Fed meeting," Reuters, April 24, 2012; "Home Prices Decline," Wall Street Journal, April 24, 2012; "Gold gains after euro-zone concerns fade," MarketWatch, April 24, 2012)

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