Japan Keeps Interest Rates Below 0.1%

Further Debasing Japanese Yen

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Gold’s London AM fix this morning was USD 1,643.75, EUR 1,255.92, and GBP 1,037.72 per ounce. Thursday's AM fix was USD 1,622.50, EUR 1,239.21 and GBP 1,022.82 per ounce.


Cross Currency Table – (Bloomberg)

Gold rose $10.60 or 0.65% in New York yesterday and closed at $1,641.30/oz. Gold rose in Asian trading prior to falls as Europe opened after the Easter break.

Gold climbed to a one week high above $1,650/oz on Tuesday, as hopes of further QE by the Federal Reserve boosted sentiment.


Gold 1 Year Price Chart – (Bloomberg)

Gold appears to have risen on safe haven buying due to concern about global economic growth after China’s import growth missed forecasts in March.

The poor US jobs number has also led to an increased expectation of further monetary easing from the Federal Reserve and this may be leading to inflation hedging purchases.

Physical demand has been poor in western and Asian markets in recent weeks but the end of the 21 day Indian jeweller strike has led to renewed demand in India and pent up Indian demand could push prices higher this week.

Continuing zero percent interest policies in major developed economies and negative real interest rates remain the primary driver of the gold market.

The Bank of Japan (BOJ) confirmed today that it is keeping its key interest rate unchanged at between 0% and 0.1%. While it will refrain from fresh monetary easing steps, it will continue with ultra accommodative monetary policies.

The BOJ warned that the overall global economy has not stopped the slowdown trend and uncertainties are still lying ahead. The central bank listed factors including the developments of the European sovereign debt crisis and international commodity prices as potential risks to the economy's recovery.

Continuing competitive currency devaluations and global currency debasement has seen gold bullion prices rise 5% year to date, while platinum and silver have risen 16% and 15% year to date (in dollar terms).

The yen has fallen by nearly 10% against gold year to date and by 13% against silver.

silver vs yen

Gold in Japanese Yen – 1971 to Today

Investors will seek further cues from various Fed officials this week on the health of the US economy and clarity on the central bank's attitude to monetary easing. No matter what ‘signals’ are given, it seems certain that debt monetisation, financial repression and currency debasement is set to continue until the consequences are abundantly clear for all to see.

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(Bloomberg) -- Gold Weakness Provides ‘Good Entry Point,’ Morgan Stanley Says. Gold’s weakness, driven by lower expectations of further stimulus by the Federal Reserve, provides a “good entry point” for investors, according to Morgan Stanley.

“Negative real interest rates, the prospect of further unconventional monetary policy in the U.S. and Europe to confront uncertainties on the growth outlook, and heightened political tensions in the Middle East are all expected to underpin strong investment demand,” analysts including Hussein Allidina wrote in a report today.

(Bloomberg) -- Platinum Has ‘Good Physical Support’ in China, Macquarie Says. Platinum has “good physical support” in China as trading on the Shanghai Gold Exchange signals more jewelry demand, Macquarie Group Ltd. said.

The fourth-highest daily sales since 2009 on the exchange after holidays in China may also signal more demand for platinum in industrial applications, Macquarie said in a report dated April 10.

“Stronger Chinese buying activity is bullish for platinum at current levels,” Hayden Atkins, an analyst at Macquarie, said in the report. Platinum is used in jewelry and industrial applications led by catalytic converters to remove harmful exhausts from cars. Yesterday marked the return of China following the annual Qingming Festival.


Gold hits one-week high on easing hope, physicals‎ (Reuters)

European Stocks Fall, Yen Gains on BOJ, China Trade Data (Bloomberg)

Gold business is back with a bang‎ (India Today)

China to maintain golden focus (The Australian)

Source: GoldCore

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About Mark O'Byrne