Friday, November 27, 2009

Indian ex-duty premiums: AM ($7.42) PM $9.81, with world gold at $1,183.25 and $1,160.02. Well below, and well above, legal import point. India’s markets were thrown into chaos the morning by the aftermath of the Dubai default, but composed themselves in the afternoon. Having been as low as R47.07, the rupee firmed to close down only 0.4% at $1= R46.64 (Thursday R46.44). Similarly the stock market closed down only 1.32%, having bottomed down 3.8%.

While precision is impossible amidst such volatility, India would appear to be a solid buyer of world gold in the $1,160s.

As noted last night, today local Vietnam gold stood at premiums to world gold of $33.76/$1,189 (AM) and $37.50/$1,162.70 (PM). Thursday’s readings were $35.94/$1,191.10 and $45.20/$1,194.60.

TOCOM, surprisingly, continued to add to its long positions. On enormous day session equal to 26,214 Comex lots, open interest rose 2.69 tonnes (866 Comex) and the public added a further 5.987 tonnes (19%)to their long. World gold lost $15.50 during the session, most of it late as Europe started to stir. The active contract closed down 85 yen. Japanese sources explain the gold interest is fueled in large part by an interest in shorting the yen, which of course hit a 14-year high against the $US yesterday.

Gold collapsed some $45 in the first 3 hours of trading Friday (NY time) as all markets experienced chaos. Volume in the CME night session was over 150,000 by 3 AM. But India is likely to be fairly undisturbed by the Dubai fiasco, and in principle an event which calls into question Gulf (and even European) banks is not bad news for gold. The physical market should be able to handle any Western professional investor stress.