Gold Up for Fourth Session as U.S. Mint Coin Sales Gain Posted by Adam King on March 20, 2013
Safe haven demand continues to support the gold market, though prices have leveled off somewhat. The renewed interest in gold as a hedge against economic insecurity was sparked this week by a vote in the parliament of Cyprus over a measure that would tax bank deposits to secure the country’s bailout package.
The price of gold gained to a three-week high on Tuesday before prices relaxed somewhat on Wednesday. By mid-afternoon trade on Wednesday, the spot price of gold was off $6.73 or 0.44 percent to $1,605.79 per troy ounce. U.S. gold futures for April delivery were also off at $6.10 or 0.38 percent to $1,604.70 per troy ounce.
Cyprus voted to reject the proposal that would tax bank accounts, but the county’s economic woes continue to be a focus of the markets in a resurgence of attention on the debt-beleaguered European Union.
Petere Buchanan, commodity analyst at CIBC World Markets in Toronto, was quoted by Reuters as saying they rejected this version of the plan, but presumably there will be something else forthcoming. He added the genie is still out of the box in that your bank account is not necessarily secure and that is broadly supportive of gold.
Demand for physical bullion continues to be a primary aspect of the market, though U.S. Mint coin sales were up modestly on Tuesday. Two gold bullion products gained on the day for gold coins sales of 2,500 ounces on Tuesday. The American Silver Eagle also gained with 54,000 ounces for the day. The American Silver Eagle Coin has topped sales of 13 million for the year as of Monday, a level never before breached by the month of March.
Markets are currently looking to the results of the FOMC meeting for a clear direction on U.S. monetary policy in the markets. Though the FOMC is considered to be a more direct influence in markets, the results of the Cyprus proposal and its rejection by the Cypriot parliament may be the wider signal that European economic troubles are back as a major influence in U.S. markets. The debt troubles in Europe are widely supportive of gold and silver.