Daily Market Report 1/11/13

GOLD

Although China is on a record pace for Gold purchases this year (see below) in overnight news, China’s consumer price inflation was reported at up 2.5% in December, on an annualized basis—up significantly from the 2.0% reading in November. That news is bearish for the Gold, as it suggests China’s central bank will be less accommodative in its monetary policy. The Chinese news combined with the Thursday statement from the European Central Bank which gave no indication following a policy meeting it would cut rates, prompting a rally in the euro and lower Gold price. At 11am PDT today, Gold is trading down $19.10, trading at $1,660 per ounce on average Friday volume.

Chinese Physical Gold Demand is Soaring 

Chinese Gold imports for the November 2012 were 90.8 metric tons. This was the second highest gross import number of 2012, double the 47 tons imported in October. This brings the year to date total to a massive 720 tons of Gold through November. If last year is any indication, the December total will be roughly the same amount, and will bring the total 2012 import amount to over 800 tons, double the 392.6 tons imported in 2011.To put Chinese Gold demand in context – for the first eleven months of 2012 China has bought some $39 billion worth of Gold, while increasing their holding of US Treasury’s by under $10 billion in the same time period.

SILVER

Silver traded down with Gold this morning after the China’s consumer price inflation was reported. At 11am PDT today, Silver is trading at $30.40 per ounce, above the important $30 per ounce support level, but down $0.60 per ounce for the day on average weekend type volume.  

More Central Bank Monetary Stimulus on the Way

The Japanese government will spend 10.3 trillion yen (US$116 billion) to drive a recovery from a recession in Prime Minister Shinzo Abe’s first major policy initiative to end deflation and boost growth. Around 3.8 trillion yen will be for disaster prevention and reconstruction, with 3.1 trillion yen directed to stimulating private investment and other measures, according to a statement released today by the Cabinet Office. Extra spending will increase gross domestic product by about 2 percentage points and create about 600,000 jobs, the government said. 

U.S. Trade Deficit Widens 

The U.S. Department of Commerce reported Friday that the U.S. trade deficit widened 15.8% to $48.7 billion in November, hitting the largest deficit since April, compared with a revised $42.1 billion deficit in October.