Gold Futures Hit Again On Fed QE Curb Fears, Cyprus & Goldman

In a surprising morning release, Minutes from the previous FOMC meeting spurred speculation that U.S. stimulus will be curbed.
Traders gave a bearish read to the unexpectedly early release. The end of Quantitative Easing is destructive for Gold as its taking Inflation off the table. This was the same reason why Gold Prices slumped from $1680 to $1550, and the same reason should have ideally been discounted in the prices by now. A push in the U.S. Dow and S&P 500 stock indexes to new record highs again funneled more money away from safe-haven Gold and Silver.

Agreed that the major catalyst for Gold Prices has been the large and repeat Fed QE, but the US Stock Markets have been rising crazily only because the Fed has been injecting massive QE each month. But if Gold Prices rise, the strength of U.S. Dollar will be questioned. The Fed is buying $85 billion of debt a month. It’s been raining bad US Economic data in the last 4 to 5 weeks.

Meanwhile, Gold has dropped 7% this year after 12 straight annual gains. Gold Holdings in the SPDR Gold Trust, the biggest exchange-traded product backed by the metal, fell to 1,200.4 tons yesterday, the lowest since June 2011.

News of Cyprus plan to sell Gold drives Prices down the most in 5 months:
There was other news that Cyprus Central Bank planned to sell Gold to raise money to help finance the European Union bailout. Cyprus had 13.9 metric tons (446,895 ounces) of gold as of March 31, according to data from the World Gold Council. The holdings were valued at $696.6 million, based on today’s Comex settlement. “Cyprus selling Gold was a big blow,” Tom Power, a senior commodity broker at R.J. O’Brien said. “Gold Prices were already under pressure because of the Fed’s comments and the stock market rally.”

The Disclaimer: Aliki Stylianou, a spokesperson for the Central Bank of Cyprus this Wednesday told the Cyprus News Agency (CNA) that reports of the $523 million gold sale have not been, “raised, discussed or debated,” with the bank’s board of directors. Stylianou said that the gold sale was, “never discussed nor are there current or future plans to do so on the board’s agenda.” Reuters based its story on a draft report from the European Commission which assessed the nation’s financing needs.

Goldman Sachs lowers its Gold Price forecast:
The 3rd reason affecting Gold Futures yesterday was that Goldman Sachs cut its three-month price target to $1,530 from $1,615 and lowered its 12-month forecast to $1,390 from $1,550, and said the turn in the price cycle is accelerating as the US Economy strengthens.

Gold Demand from China rises on Price pullbacks:
Strong Gold imports by China during February appear to be the result of the New Year holidays and increased demand after lower prices. Data from Hong Kong shows China viewed a Gold pullback this year as another buying opportunity. Month-on-month Chinese imports from Hong Kong nearly doubled to 97.1 tons, according to the Census and Statistics Department of the Hong Kong government. China’s Gold Demand has not wavered in the face of all the negativity in the market surrounding the end to the Gold Bull Run, and continues unabated during price pullbacks.