Tuesday, July 28, 2009

Staggering volume

Indian ex-duty premiums: AM 28c, PM ($4.91) with world gold at $954.05 and $954.98. Below legal import point. The rupee weakened slightly to $1=R48.21 (Monday R48.16). The stock market finished down 0.28%.

Vietnam local gold stood at a $3.70 discount to world gold of $952.45 this morning (Monday $8.73/$951.90)

TOCOM was a light seller. On day session volume equivalent to 6,549 Comex lots open interest slipped 1.82 tonnes (584 Comex). The public cut 0.46 tonnes from their long. The active contract closed up 9 yen and world gold which came in around the NY close went out $1.80 higher.

The ECB weekly statement of condition indicates no gold disposal at all for the second week running. This is unprecedented in the almost 10 year history of the Washington Agreements. The ECB Banks appear to have withdrawn from the market. On the other hand, renewal of the Washington Agreement, which finishes at the end of September, is getting conspicuous by its absence.

Today world gold initially rose from the TOCOM open, adding about $4 by the early European day. However this was entirely due to dollar weakness. This was erased in the hour before the Comex open, which saw immense selling: estimated volume of 124,953 contracts by 10AM. From the Comex open, the decline in $US gold (some $15) and Euro gold has been equivalent: a really serious seller has appeared – this is not just dollar firmness. The PM fix was a wide $10.75 below the AM one.

As noted last Thursday, it is a curious fact that whatever market conditions tempt The Gartman Letter to try doubling up to buy breakouts seem very often the precipitate violent selling. TGL’s 1-hr.>$955 was triggered yesterday.

Estimated volume at 12 noon was an immense 201,689 lots. ***