EU says yes to gold bullion collateral

Precious metal prices moved higher yesterday, with Comex gold for delivery in May moving up by 0.2%, or $3.40, to $1,526.60 per troy ounce. Silver was an even stronger performer, with the May Comex silver contract moving 4.2% higher to settle at $37.640 – a $1.519 gain.

The commodity sector was helped by a lackluster showing from the US dollar, which seems to have stalled following its gains in recent weeks. The Dollar Index is still under 76, and a move back below the 50-day moving average at 75 would encourage further selling and will likely lead to further price gains in commodities and precious metals. Courtesy of Robert Wenzel’s blog EconomicPolicyJournal, readers may be interested in this chart of commodity prices since 1749.

Crude oil made further gains in trading yesterday, on the back of a new report from the US Energy Information Administration showing a 502,000-barrel-per-day increase in refinery inputs week-on-week. Coupled with a decline in distillate stocks, this meant a rise of $1.73 in the price of WTI crude for July delivery traded at the New York Mercantile Exchange. The settlement price was $101.32.

Brent crude for delivery in the same month gained $2.40 to settle at $114.93. Increased refinery output in the US could mean WTI crude gaining in price relative to Brent, resulting in increasing inflationary pressures and expectations in America. West Texas Intermediate (WTI) is the pricing benchmark for crude oil traded in North America.

Gold investors will be interested to note that yesterday the European Parliament’s Committee on Economic and Monetary Affairs agreed unanimously to allow clearing houses in the EU to accept gold as collateral. This follows similar moves by CME Group in 2009, and JP Morgan Chase earlier this year, and marks yet another step forwards in gold’s acceptance as money.

Source: Gold Money