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The John Brimelow Report

Bears in trouble?

Thursday, April 01, 2004

Indian ex-duty premiums: AM $4.83 PM (N/A), with world gold at $424.60. A little below legal import point. Reuters did not carry PM data. The Bombay Stock Exchange soared 2.69% today: if this euphoria carries over into the FX market, gold bears are likely to have difficulty in forcing world bullion down.

There seems to be a little appetite in Japan, too. On volume equal to 28,736 Comex contracts, (down 29% from yesterday’s possibly FY-end-swollen level) the active contract rose 5 yen and open interest edged up the equivalent of 620 Comex contracts, although World gold was $1.20 lower than the NY close at the end of the TOCOM day. Also, the discount on Shanghai Gold Exchange prices has narrowed to under a dollar. (NY traded 62,784 lots yesterday: open interest climbed a steep 6,996 lots to 302,040.)

Gold in NY yesterday battled up, grimly. The estimated volume suggested that activity jumped 50% in the last half hour; UBS comments:

"Very good two way flows were seen between the $425 and $426 level in spot with speculators the main buyers and trade the sellers. Fifteen minutes before the close further speculative buying was seen and this continued into the session’s end, which saw gold close on the highs of the day."

The determination of both sides is well demonstrated by this addition of almost 700,000 oz of net buying to the Comex longs.