Daily Market Report 6/26/13

GOLD

Gold prices were sold down to a low of $1,224 per ounce in Asia this morning on fears about the impact of a cash crunch in China. This, along with the projected low Indian Gold demand, has the government restricting banks to make Gold-backed loans in order to curb imports in addition to increasing import duties. The end of the wedding season in India has also weakened demand. These four factors are combining to drive Gold lower.

The People’s Bank of China said Tuesday that interbank liquidity risk is largely under control and the current cash crunch is temporary, but selling in the Shanghai stocks and precious metals markets resumed Wednesday morning, indicating that the central bank’s comments have so far failed to restore investor’s confidence. The cash crunch among the Chinese banks, the slowing economy and the market volatility have dampened the Gold demand in Hong Kong and China, causing people to wait-and-see. Premiums in Gold bars in Hong Kong are around $2.50 an ounce compared to $6 in May. The Chinese demand in the near-term and other central bank’s actions will be the key to the turnaround of the already very weak sentiment in Gold prices.

At 11am PDT Today, Gold is trading at $1,234 per ounce, down $44 per ounce (3 year low) on heavy volume.

SILVER

Silver fell with Gold this morning and hit a low of $18.42 per ounce earlier today.

At 11am PDT today Silver is down $0.88 per ounce, trading at $18.70 per ounce on heavy volume.