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COMMODITIES GOLD GOLD: REBOUNDS WILL RISK SHIVER BATTERED AVERSION ON JAPAN AFTER BY BANISH DEBT SHARPEST U.S. CREDIT DOWNGRADE CORRECTION LOSS DOWNGRADE SINCE DESPITE FEARS? MAY CORRECTION FEARS AUGUST 2011 Gold 24-hour technical outlook: ( http://graphics.thomsonreuters.com/WT1/20112508095642.jpg ) NOT SAFE ANYMORE? "People always refer to gold as safe haven. When we introduce volatility to the equation, it doesn't seem so safe anymore," said a Singapore-based trader, but added that gold's luster looks intact. "Many leveraged longs are going to leave it alone for a while. And when prices come down like this, it might be a buying opportunity for real money account like central banks." Technical charts suggest that a medium-term uptrend for gold is intact even after the sharp drop over the past two sessions, with a rebound likely to push it to $1,784, said Reuters market analyst Wang Tao. Holdings in the SPDR Gold Trust dropped 2.2 percent on the day to 1,232.314 tonnes by Aug. 24, its lowest in more than a month and down 6 percent from a one-year high of 1,309.922 tonnes hit on Aug. 8. ANZ has raised its forecast for gold prices, expecting prices to peak at $2,200 in the second quarter of 2012, from a previous forecast of $1,800. "The substantial revision has been propped up by an unusual lack of support for the US dollar under the current uncertain financial market conditions - effectively channelling stronger than normal safe-haven flows to gold," said ANZ analysts in a research note. CME hikes gold margins as expected; second time in Aug By Antonita Madonna Devotta and Rujun Shen BANGALORE/SINGAPORE, Aug 24 (Reuters) - T he CME Group on Wednesday raised margins on gold futures by about 27 percent, the biggest hike in more than two and a half years and the second increase in a month, as gold prices fell sharply after a record-setting rally. The hike was widely anticipated after the Shanghai Gold Exchange announced to raise margin requirements on some of its gold forward contracts earlier this week. The CME group raised maintenance margins on COMEX 100 Gold Futures for speculators to $7,000 per contract from $5,500, effective after the close of business on Thursday. The margin increase came as the most-active contract dropped 5.6 percent on Wednesday in its worst day since March 2008, after strong U.S. durable goods orders data prompted profit taking from the safe-haven's record high on Tuesday. A goldsmith works on a gold bangle at a workshop in Kolkata August 1, 2011. REUTERS/Rupak De Chowdhuri 10
COMMODITIES GOLD GOLD: REBOUNDS WILL RISK SHIVER BATTERED AVERSION ON JAPAN AFTER BY BANISH DEBT SHARPEST U.S. CREDIT DOWNGRADE CORRECTION LOSS DOWNGRADE SINCE DESPITE FEARS? MAY CORRECTION FEARS AUGUST 2011 Prices of the contract slid to an intra-day low of $1,744 an ounce on Thursday after the CME announcement, before bouncing up to $1,763.20 by 0241 GMT. Prices hit an all-time high of $1,917.9 on Aug. 23. "A lot of hot money has entered the complex and the rally was done too much in too short a time," said David Thurtell, an analyst at Citigroup. "Last 24 hours there was definitely profit-taking. With the margin hike, if speculators don't have the money to pull out as extra margin they'll just cut their positions. That contributed to the liquidation." The new margin would be roughly 4 percent of a lot of the most-active contract, up from about 3 percent. The total aggregate margin call on COMEX gold futures contracts would be nearly $1.6 billion, based on calculations on the total open interest by the end of Aug. 23. CME hike announcement: ( http://link.reuters.com/fyk43s ) Spot gold rallied about $400 dollar from the beginning of July to a record above $1,911 on Tuesday, on concerns about the faltering U.S. economy and a lingering euro zone crisis. The exchange operator also raised initial margins on COMEX 100 Gold Futures for speculators, to $9,450 from $7,425 per contract. Margins are deposits paid by investors in futures markets, where full payment is made when contracts mature to an exchange or clearing house to cover the risk of default by that investor and typically are based on the largest most-likely daily market move. Japanese cash in on gold price boom By Chikako Mogi and Chikafumi Hodo TOKYO, Aug 24 (Reuters) - F or Eriko Ebina, standing outside a downtown Tokyo medical equipment store that has a side business buying gold, the recent surge in prices for the precious metal was just too tempting. "For more than 30 years, I kept gold jewellery mother bought for me, and with media saying prices are high, I thought I would sell them now except for a few keepsakes from her," said Ebina, in her 60s. "I earned more than I thought they were worth. I'm not interested in buying gold." It is sellers like Ebina who will offset surging investment into gold funds in Japan, which should make the country a net exporter for the sixth year in a row. The assets of Mitsubishi UFJ Trust and Banking Corp's physical gold exchange traded fund (ETF), Japan's first backed by metal stored in the country, have grown by a quarter since end-July to 21.8 billion yen ($284.9 million) as of Aug. 23. "Investors are seriously treating our gold ETF as a legitimate asset class, just like investing in equities, bonds and currencies," said Osamu Hoshi, deputy general manager at Mitsubishi UFJ Trust. "They see a need to diversify their assets after seeing volatile moves in currencies and stocks and others," Hoshi said. GRAPHIC of Japan gold demand: ( http://link.reuters.com/cah43s ) PDF on gold's run to record: ( http://link.reuters.com/syg43s ) A downgrade of the U.S. sovereign debt rating amid a deteriorating outlook for the world's largest economy, as well as a spreading European debt crisis, have triggered a rush to gold that has boosted prices by 14 percent this month. "Inflows have become especially big this month as fears over both the U.S. dollar and the euro have intensified," said Ryosuke Okazaki, chief investment officer at ITC Investment Partners. ITC's Japan Gold Funds have about about 2 billion yen under management. Still, ETF assets are a fraction of physical holdings, and Japanese institutional investors such as pension funds remain reluctant about exposure to commodities. "They could be holding commodities in hedge funds, like managed futures, but I don't think many want to invest directly in gold or other commodities even if returns are extremely attractive," said a fund manager of an industrial material maker, who supervises about 50 billion yen in corporate pensions. Gold prices may be hitting successive records, but for those buying in yen, they are still down nearly a fifth from a record high in 1980. There is also no strong incentive to buy. "The current core investor generation has not experienced real damage to the yen's value or a crisis which rocked the country," said Tetsu Emori, a fund manager at Astmax Co Ltd. "There is no sense of fear in Japan right now as there is in Europe or in the United States. So, investors who own gold focus only on how to cash in from the rise in prices," he said. PHYSICAL SALE PREVAILING Gold in Japan is not so much associated with risk aversion, but more as an asset that many bought when prices languished for 30 years. 11
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