Daily Market Report 05/25/12

GOLD
Gold is ending the week in the $1,550 to $1,570 price range. As we go into this long holiday weekend most precious metal professionals and analysts are looking to Europe for direction. Euro-zone ministers need to stabilize the sovereign debt problem and stop the capital flight from the Euro. The latest idea is to establish a Euro Bond Redemption Fund, where countries or banks requiring a monetary injection of Euros will provide Gold as collateral. At 11am PDT, in spite of a raising U.S. Dollar versus the Euro, Gold is up $12.40 per ounce trading at $1,568.80 per ounce on normal weekend volume.

The World’s Central Banks are Running Away From U.S. Dollars and Euros and Buying GOLD?
The International Monetary Fund announced late yesterday that Central Bank purchased 70.3 metric tonnes of Gold in April 2012.
The Philippines added 32.13 metric tonnes to 194,241 tonnes
Turkey added 29.7 metric tonnes to 239.3 tonnes
Mexico added 2.92 metric tonnes to 125.5 tonnes
Kazakhstan added 2.02 metric tonnes to 98.19 tonnes
Ukraine added 1.4 metric tonnes to 30.607 tonnes
Sri Lanka added 2.177 metric tonnes to 7.807

The deputy chairman of Russia’s central bank, Sergey Shvetsov, said that the Bank of Russia plans to keep buying Gold on the domestic market in order to diversify their foreign exchange reserves.  

Central banks added 456.4 tonnes last year, the most in almost five decades, and are tracking to a much higher quantities this year. While the Gold tonnage demand from central banks in recent months has been significant, Gold remains a tiny fraction of most central banks, especially emerging market creditor nations such as China, foreign exchange reserves and therefore the trend is sustainable and indeed may accelerate. Central bank reserve diversification into Gold may increase given the Euro-zone debt crisis and the risk of debt crisis spreading to Japan, the UK and the U.S.

SILVER
Silver tested the $28 per ounce support level again overnight and rallied back up. Every time Silver breaks below the $28 price area demand increases, rallying the market back above $28 again. At 11am PDT, Silver is trading at $28.52 per ounce, up $0.32 on average weekend volume.