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Euro Zone "Danger Zone" - Greek Bank Runs and UK, Irish Property Prices Falling ... Again

- Gold looks set for second consecutive week of gains
- Japan’s QE fails - Returns to zero inflation
- ‘Master of the universe’ central bank speeches today
- ETF and COMEX holdings fall as gold flows East
- JP Morgan to be part of new gold ‘fix’
- Greeks pull €8 billion from banks
- “No one knows how to solve the situation in Greece”
- Bundesbank warns debt in euro zone has entered “danger zone”
- UK and Irish house prices are falling … again

Today’s AM fix was USD 1,198.00, EUR 1,106.70 and GBP 805.32 per ounce.
Yesterday’s AM fix was USD 1,209.40, EUR 1,097.26 and GBP 809.23per ounce.

Gold climbed 0.65 percent or $7.80 and closed at $1,203.40 an ounce yesterday, while silver rose 0.47 percent or $0.08 at $17.05 an ounce.

Gold in U.S. Dollars - 1 Week

In the end of day trading in Singapore, gold prices climbed 0.3 percent to $1,199.95 an ounce after reaching a high on Thursday of  $1,219.40. Gold surged  after news of the bombing in Yemen but prices were capped at the $1,220 level prior to a retracement of much of the initial gains.

Oil prices jumped over 6 percent at one stage and stock markets worldwide slumped yesterday after Saudi Arabia and allies carried out air strikes, which fueled worries internationally that global energy shipments may be put at risk.

The U.S. claims that Saudi Arabia kept some key details of its military action in Yemen from Washington until the last moment. Saudi Arabia’s more aggressive role is said to be in order to compensate for perceived U.S. disengagement.  U.S. President Obama's Middle East policy increasingly relies on proxies rather than direct U.S. military involvement. He is training Syrian rebels to take on the government of President Bashar Assad and this week launched air strikes to back up Iraqi forces trying to retain the city of Tikrit.

All of this has the real potential for ‘blowback’ in the classic sense and risks leading to a hot war involving Russia.

Gold pulled back today as traders took profits after a seven-day rally in the yellow metal. In spite of the price dip gold is expected to rack up a weekly gain of around 1.5 percent. Gold looked overvalued after the 7 days of price gains and the final rally to over $1,219/oz. The last winning streak of 7 consecutive days in a row was in August 2012. Gold appeared overbought and was due a correction.

As tends to happen, gold is now testing previous resistance at $1,200/oz which may become support.

Gold may have a second week of gains today and if this happens we would be constructive on further price gains next week. Momentum is a powerful force in markets and the recent gains could see technical traders pile in the long side pushing prices higher next week.

Gold in GBP - 1 Week

However, a lower weekly cose today could lead to sharp selling on futures markets near the close today and at the open in Asia which could push prices lower.

The question is whether the recent rally is another flash in the pan for gold or the start of a more meaningful rally in prices. We believe it is too soon to tell. However, we are confident that gold is in the process of bottoming prior to further gains in the coming months.

Japan has returned to zero inflation after recently emerging from recession, once again highlighting how ineffective QE has been at creating a real, sustainable economic recovery.

It's a day of ‘master of the universe,’ central bank speeches as both Bank of England governor Mark Carney and Fed chief Janet Yellen preach their ultra loose policies and certain market participants lap up the ‘Gospel according to Mark’ … and Janet. Central bank believers will be watching for indications of their position on rate rise timings and their crystal ball view on the economies of the UK and US respectively.

U.S. GDP estimates for the fourth quarter are forecast for an upward revision from 2.2 per cent to 2.4 per cent on the back of an increase in consumer spending.

Yesterday saw a huge withdrawal of 5.97 tonnes from the world's largest gold ETF, New York-listed SPDR Gold Shares. The nearly 6 tonne fall to 737.24 tonnes on Thursday, its lowest level since January.This month's outflow from the SPDR has totalled just over 34 tonnes so far, the largest of any month since December 2013.

Over on the COMEX, withdrawals continue. Earlier this year, the COMEX had 303 tonnes of total gold inventories. Yesterday the total inventory fell to 248.27 tonnes. This is a loss of 55 tonnes over that period and lately the withdrawals have been intensifying. Gold continues to flow from the West to East.

JPMorgan will be one of seven participants in the LBMA gold price according to ICE as reported by Eddie van der Walt in Bloomberg.

JPMorgan is to be among seven companies able to participate in LBMA Gold Price benchmark, ICE said today in statement published online. Other participating banks are Barclays, Goldman Sachs, HSBC, Bank of Nova Scotia, SocGen and UBS.

The new LBMA gold price has all the hallmarks of the old fix with just a few banks taking part in it and little participation from large players in the industry - miners, mints and refiners. Also it is noteworthy that there is no non Western banks taking part in the new gold fix. None from Africa, South America or Asia and none from China where there has been speculation of involvement in the new fix.

The crisis in Greece looks set to escalate in the coming days. Greek bank deposits plunged to an almost 10 year low in February as some €8 billion ($8.7 billion) were withdrawn from lenders, amid rising political uncertainty and worries over the country’s possible exit from the eurozone.

Total deposits fell to €152.4 billion euros in February, down from €160.3 billion in January, data from Greek central bank showed yesterday. This is the lowest level since June 2005.

Greece is hurrying to compile a list of economic overhauls that satisfies its creditors and secures desperately needed euros, as it runs increasingly low on cash and debt payments loom.

Officials in Greece's new government, led by the leftist Syriza party, aim to submit a list of overhauls by Monday at the latest, officials have said. Greece hopes that eurozone finance ministers can meet and approve the country's overhaul programme by next Wednesday.

Austria's Finance Minister Hans-Joerg Schelling admitted today that “no one knows how to solve the situation in Greece”.

"We have a crisis of trust with Greece. Every day something is agreed upon and the next day it's invalid," Mr Schelling said speaking to the Klub der Wirtschaftspublizisten, a group of financial journalists in Vienna.

The head of Germany’s Bundesbank has warned debt in the euro zone had entered the “danger zone” and called for banks’ exposure to the debt of individual countries to be capped.

Gold in Euros - 1 Week

He is opposed to more emergency funding for Greece, accusing Athens of gambling away “a lot of trust”.

Speaking to the weekly Focus magazine Jens Weidmann said: “Until the autumn, an improvement in the economy had been discernible. But the new government has gambled away a lot of trust.”

“I am opposed to an increase in the emergency loans,” Mr Weidmann, who also sits on the European Central Bank’s decision-making governing council, said.

UK and Irish house prices are falling. The UK’s Nationwide house price index has revealed a seventh consecutive month of a slowdown in the UK property market. House price falls in central London have start to spread out across the capital to South West London.

In Ireland, property prices fell again in February. Residential property prices fell by 0.4 per cent nationally last month, with the decline in Dublin rising to 0.7 per cent, according to latest official figures. Results show more than 2 per cent has been wiped off the value of homes in the capital since the beginning of the year.

In London in late morning trading gold is at $1,201.73 or down 0.30 percent. Silver is at $17.24, up 0.23 percent and platinum is $1,142.70 down 0.72 percent.

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