The Daily Nugget: China’s Imports Double To Record Levels

Yesterday gold slipped back below $1,400 as the dollar gained strength, once again on the back of speculation that the easing may be halted by the Federal Reserve. This morning it has climbed above $1,400 as speculators remain unsure of the non-farm payroll outcome on Friday.

Data released by the OECD will have no doubt given the likes of Bernanke and Sir Mervyn a boost to their convictions that monetary easing is not always inflationary, the organization reported yesterday that inflation in April was at near 4 year low.

Housing market data is one of the key indicators Bernanke and the rest of the FOMC are keeping an eye on so they will have been relieved to see house price data which showed home prices increased by 12.1% year on year in April. This is the fastest rate since 2006. However, the other key indicator, jobs, wasn’t looking as rosy yesterday as May job growth saw hardly any improvements at all.

ETF outflows, bullish for gold?
Yesterday’s Best of the Web discussed ETF outflows and what they meant for the gold price, the authors concluded that they could only be good for gold. According to data released by IndexUniverse yesterday the SPDR Gold Trust lost $2.9 billion in assets last month and is set for a sixth consecutive month of outflows in June.

Total outflows in gold ETFs last month were 5.7 billion, according to Blackrock this brings year-to-date redemptions to 423.9 billion.
India’s gold import duty

Yesterday’s fall below $1,400 was not only attributed to dollar gains but also to moves by the RBI to curb gold imports. The central bank believes that gold imports account for 80% of the country’s current account deficit. The country was the largest gold importer last year and fears of further curbs on gold purchases have caused some concern that there may be a slowdown in demand.

The RBI announced on Tuesday that the restrictions currently in place on overseas gols purchases by banks will now be expanded to include state-run trading companies others who are authorized to import gold.

Speaking of big gold importers, China’s gold imports from Hong Kong hit yet another record back in March, doubling from February to 136.1885 tonnes beating the previous record of 114.372 tonnes in December. Whilst this is interesting data I suspect it will soon be outshone by data from both April and May when buyers embraced prices not seen for a couple of years.

Gold bears come together

Following from Roubini’s article over the weekend Societe Generale have issued a report which reiterates is bearish view on gold. The bank expects the FOMC to begin slowing down it bond purchases. Commerzbank also support the bearish view, projecting prices to hit $1,227. BAML, in contrast have changed their bearish view to a more neutral standpoint. Meanwhile UBS have said that a ‘strong fundamental catalyst’ is needed ‘to unnerve the vast majority of (short-traders) in the near term.’