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Strong rebound on short-covering, international physical demandby Peter A. Grant
Apr 16, AM 
Gold rebounded on international markets overnight and in the early hours of U.S. trading. As is often the case after a sharp selloff, short-covering is leading the rally. Gold is up over $40 from yesterday’s intraday low at $1345 per ounce as this is written and trading at $1383 per ounce level. The two-day price drop that began on Friday could not have come at a better time for India’s buyers as that country enters its wedding seasons – a traditional time for high volumes in the physical market. The lower price was greeted with a surge of in the United States too as reported here yesterday. That interest continues today with strong call volume at our offices and a steady stream of buy orders. Reuters similarly reports strong interest this morning in Asia with premiums soaring to 16-month highs – an indication of building demand. One Beijing physical gold firm reported a 60% to 70% rise in demand “because of the lower prices.” Dubai gold merchants similarly reported “big business” the result of lower prices. There is little in the way of fresh news on gold’s two-day sell-off, but its mysterious origins, i.e. the 400-tonne and 100-tonne paper sales on the Friday Comex open still beg an explanation. An HSBC report called the gold market “oversold,” a description with which we happen to agree. It looks for a “slow grind higher.” HSBC shrugged off most of the mainstream explanations for the sell-off by saying: “None of them in isolation truly explains the violence of the move. This type of capitulation needs significant selling by the major players in the market. These sales are fast and large whilst the real buyers are slow and small. Over time, the slow and small over should re-establish an uptrend.” And that’s about the best take on the situation we have seen in two days. NEWSLETTER SIGN-UP Opinions expressed in commentary on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.
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Tuesday April 16
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