Gold's London AM fix this morning was USD 1,648.25, EUR 1,266.03, and GBP 1,040.69 per ounce.
Friday's AM fix was USD 1,670.50, EUR 1,269.86 and GBP 1,048.91 per ounce.
Cross Currency Table - (Bloomberg)
Gold fell $19.10 or 1.14% at the close in New York on Friday and closed at $1,656.10/oz. Sharp and rapid falls on high volume were seen in the last few minutes on the COMEX. The sell off was unusual with some 10,000 contracts worth some $1.5 billion traded and there were no corresponding moves in foreign exchange, equity, bond or commodity markets.
Spain 10 Year Bond - 2 Years (Daily)
The weakness seen on the Friday COMEX close continued in Asia when gold fell to as low as $1,640.50/oz prior to a slight bounce on European trading.
While gold fell 1% on Friday, bullion still managed to record a 1.7% weekly rise in dollars and similar gains in other fiat currencies. It was gold's biggest one week gain since late February. This was important from a technical point of view and could lead to further gains this week.
XAU/EUR 2 Year Weekly Currency Chart - (Bloomberg)
Gold's 1% drop overnight comes despite the continuing rise in Spanish, Italian and Portuguese bond yields. Spanish bonds fell sharply this morning with the 10 year yield rising to over 6.15% (see chart).
There is the slow realisation that the complacency of recent months was again misplaced. It remains obvious that the euro zone debt crisis is far from over and this will support gold in the coming months - especially in euro terms.
Gold in euro terms has been consolidating above €1,200/oz for six months now. With the eurozone crisis set to deepen and the continuing risk of contagion, we could see gold break out in euro terms prior to doing so in dollars, pounds and other currencies.
XAU/EUR 15 Year Monthly Currency Chart - (Bloomberg)
Gold in sterling terms has had a similar period of consolidation above £1,000/oz (see chart below) and with the U.K. economy struggling and negative real interest rates set to remain, sterling will continue falling against gold in the medium and long term.
Increasing signs that the Chinese and U.S. economic recoveries are very shaky is beginning to weigh on market sentiment which should also contribute to safe haven demand resuming.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.