Precious metals flash

Precious metals traded sideways during most of European hours, until U.S. markets opened up and started to sell risk, while pushing the USD Index to the highest level since September 2010. Gold saw heavy volumes trade once falling below 1550, where 4.1 Mio. ounces exchanged hands in the next 30 minutes. Asian buying was reported on the lows and various of our physical contacts confirmed increased physical demand for kilo and 100 gram bars in the last couple of weeks, which are finding their way to the Asian and Indian market. Global ETF flows were mixed, while our day saw selling on JB Gold funds, the SPDR GLD was up by 87’000 ounces or 2.7 tons and ETF Securities was up by 34’000 ounces or little more than one ton. EU leaders got together and Eurobonds, as well as the Greek situation were discussed, without significant news hitting the headlines. US stock markets recovered in the last hour of trading, which helped risk. During Asian hours Junker commented that Eurobonds would not be seen anytime soon and the HSBC China PMI showed further contraction, which put some pressure on markets again. Today is option expiry on Comex and the largest near strikes are 1500, 1550 and 1600. The markets should remain headline driven and any move towards the strong support of 1525 in Gold should see nervousness increase, while a move higher could see implied volatilities come off again. How nervous option traders are, shows the fact that the 1 month moved from 16.75 to 19.5, back to 16.5 and again to 19.5 % in the last couple of days.