Daily Market Report 02/16/12

GOLD

Gold continues to tread water waiting on developing news in the European Union’s decision on the debt crisis. The base gold is building above $1,700 will pay big dividends as we start the move to the $1,800 and above resistances levels. Gold tested that important $1,700 support level for the third time early this morning, held at $1,704 and quickly rallied back to $1,720 on excellent demand. At 11am PST, Gold is trading at $1,727.90, up $1.30 per ounce on above average volume of trading. Additionally, gold equities turned up today, which may be a harbinger of a nice rally coming in the next few days.

2011 Gold Supply/Demand numbers are now available

Supply

The World Gold Council reported that Gold-mine production hit a record high in 2011, although total supply for the year fell due to less scrap supplies returning to the market and an increase in net purchases by central banks. Mine production hit 2,809.5 tons, up 4% from 2010. However, overall supply—when including other sources—was 3,994 tons which is 4% less than the 2010 supply. Surprising low considering the average yearly gold price for 2011 was over $1,600 per ounce, a record all-time high.

Demand

Global demand for gold in 2011 rose to 4,067.1 tonnes, worth an estimated US$205.5 billion - the first time that global demand has exceeded US$200 billion and the highest tonnage level since 1997, according to the World Gold Council’s Gold Demand Trends. Of the total 4,067 tonnes 2011 world gold demand, 1,703 tonnes (41.8%) came from China and India. The main driver for this increase was the investment sector where annual demand was 1,640.7t up 5% on the previous record set in 2010 and with a value of US$82.9 billion.

The Full 2011 Gold Supply/Demand report is available at
http://www.gold.org/media/press_releases/archive/2012/02/gold_demand_trends_q4_2011_pr/

SILVER

Silver was beaten down early this morning in Asia on the continuing problems with the Greek debt crisis. At one point, Silver reached $32.54 per ounce, before we saw bargain buying.  Demand picked up and Silver rallied back above the important $33 support level.  At 11am PST, Silver is trading at $33.48, up $0.02 on average volume of trades.