On Friday gold fell back in the immediate aftermath of the strong US payrolls report, which boosted the appetite for equities and the dollar. Prior to the jobs report, the price of gold had stabilized around $1200 per troy ounce following Monday’s sharp recovery. It was thus holding above the high of not just last week but the last month, too. In other words, precious metals traders had completely gotten over the disappointment from the “No” vote in Switzerland’s “Save Our Swiss Gold” proposal. Gold has more than recovered from that disappointment and even the stronger jobs report has so far not caused a major reaction, at least relative to Monday’s price swing. Indeed, at the time of this writing gold was still displaying a large bullish outside candle on the weekly chart, as evidenced by the first chart below. Should the weekly candle also close this way then it would suggest further gains could follow next week.

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gold price daily chart 5 december 2014 price

Friday aside, the dollar has not had as much impact on gold’s direction as it did previously, for the dollar index has continued in its upward trajectory this week. Therefore, it will be very interesting to see how the yellow metal will do relative to the dollar’s performance next week. If the greenback continues in its upward trajectory, but gold fails to head in the opposite direction, then one could conclude that the two assets have decoupled for now. So, there is a chance that investors are finally starting to treat gold as an independent asset, not a USD-denominated FX pair.
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gold dollar decoupling 2014 price

All that said however let’s not forget that it is not unheard of for the two assets to decouple in the short term only for the strong negative correlation to resume again at some point down the line. What’s more, there was actually a good reason for gold to have climbed higher earlier this week, and for once this was driven by news from the physical market: in a surprise move last Friday, India lifted some of the gold import restrictions. The so-called 80:20 rule, requiring importers to sell 20% of their shipments to jewelers for re-export, was abolished with immediate effect. Although the 10% import tax is still there, the removal of the 80:20 rule should help to shore up the physical demand in the former top gold consumer nation. The main wedding season in India is now underway and will last until about late January – just before the temperatures start rising towards uncomfortably hot levels. During this time, it is reasonable to expect large amounts of jewelry purchases by the Indians.

Given that gold has shown relative strength around the $1180 to $1200 area for the best part of two years now, many physical buyers may be or are thinking about increasing their holdings. If the physical demand rises now, prices could stage at least a moderate recovery regardless of what the dollar does. But the long-term trend is still technically bearish, so the vast majority of the market may still be positioned short. However if gold breaks above a long-term bearish trend and resistance around $1240 then we could see the unwinding of those positions which could thus lead to further strength in the medium term. Meanwhile in the more near-term outlook on the daily chart above, gold is also holding below a separate bearish trend line which comes in around $1215. The 61.8% Fibonacci level ($1208) of the last downswing and the 50-day SMA ($1202) also converge around this $1200/15 region, making it a sticky area of resistance. Thus a break above $1215 could potentially be a significant bullish development in the short term.

Ancient Gold Found In Toilet Hole Leads To Investigation

India’s latest gold rush continues to expand as newspapers report that more ancient 250-year-old coins have been recovered from a small village in the southern part of the country.

On Thursday the Bangalore Mirror, one of the first newspapers to report on the discovery of the ancient coins, said that police have recovered 639 more coins. In total, 729 coins dating back to the 18th and 19th centuries have been found.

According to the article, the more than 600 coins were not recovered from excavation efforts in the area, but were confiscated from the four laborers who originally found the pot of gold Sunday, when they were hired to dig an eight-foot hole that was going to be used as a toilet.

Ancient Gold Found In Toilet Hole Leads To Investigation

Although the Mirror didn’t provide exact details, other media outlets have reported that police recovered from each of the four laborers 106, 168, 179, 183 coins, respectively.

The police were called, earlier this week, to investigate the discovery of the coins when they received a call from a pawnbroker from a nearby town. One of the workers took a coin to the broker to find out how much it was worth.

The pawnbroker deceived the worker, saying that the coin was a fake and worthless and then called the police to tell them that people had found ancient coins.

In the initial investigation, newspaper reports said the laborers first gave the police only eight coins and after further interrogation admitted to having 43 coins.

After the coins were discovered, the police called the Archaeology Survey of India, which now has the coins and will be looking for the potential owners of the coins. If nobody comes forward with proof of ownership, the coins will become government property.

After researching the area, the ASI said that the coins were located near the ancient Venupolaswamy temple, which at one time was a popular site, and recovered 50 coins after searching the area.

It is still not know if the ASI will continue to excavate the area to search for more coins and historical artifacts. The newspaper reports also don’t say if the four laborers have been changed with anything.

Although the pot of gold at the end of a rainbow might be elusive, one at the bottom of a soon-to-be toilet pit was a reality, at least briefly for four laborers in India.

News reports throughout India have reported that since Monday, a total of 93 ancient 200-year old Indian coins have been recovered by the Archaeology Survey of India in a village in the southern part of the country.

According to the International Business Times and the Bangalore Mirror, a local resident of the village hired four laborers to dig an eight-foot hole near his home to be used as a toilet. The workers found the pot of ancient coins after digging to a depth of about five feet; however, instead of informing the owner of the find, the workers reburied the gold and told the homeowner that they were unable to finish the work that day.

Later that evening, the men returned to the work site and recovered the buried treasure; from there they made their way to a nearby town and took a coin to a pawn broker to determine its value. The media reports went on to say that the pawn broker sent the workers away, telling them that the coin was a fake and worthless.

However, the pawn broker’s claim was a ruse. After the men left, he called the police and informed them that workers had found an ancient coin. The police caught up with the men who first admitted that they had only eight coins but under further questioning revealed that they uncovered 43 coins.

After confiscating the coins, the police then contacted the ASI, who came to investigate the area. The archaeology department discovered that the area is near the Venupolaswamy temple, which at one time was a popular site. The department officials speculated that more coins could be buried in the area and after further digging, recovered 50 more coins.

The exact date and value of the coins is still to be determined but the reports said that after initial observations, it appears that they are from the 18th and 19th century when the area was controlled by Hyder Ali, ruler of the Kingdom of Mysore.

The newspaper accounts didn’t provide any information on charges the laborers may face or if the homeowner will be compensated for the coins. The district administrator for the department of archaeology said in media interviews that the ASI will look for potential owners of the gold and if nobody comes forward with proof then the coins will become government property.

It is also unclear if the ASI will continue to excavate the area in search of more coins.

In a surprise move, the Indian government has removed restrictions on gold imports and although generally positive for the gold market, it won’t significantly change the overall bearish tone, according to some analysts.

On Friday, the Indian government removed its current 80:20 import rule, which said that 20% of all imported gold had to be mandatorily exported before any new shipments could be brought in. Analysts have pointed out that the news is a surprise because recently there was speculation that the government would tighten import rules.

Although the 80:20 rule was curtained, the government did not mention whether it will reduce the 10% duty on all gold imports.

Analysts, though, are not expecting gold demand in India to drastically change because of the eased restriction as smuggling has increased significantly since 2013.

“On the margins it’s positive for gold but I don’t see it as a game changer,” said Bart Melek, head of commodity strategy at TD securities.

Melek added that “informal networks” filled the void created by the import controls. However, he admitted that now that those restrictions have been lifted, premiums should end up dropping, which could increase demand throughout the country.

Julian Jessop, chief global economist at Capital Economics, agreed that the government rules on gold imports weren’t very effective and although the news is bullish for the market, it will not drive prices significantly higher in the near-term.

Jessop added that Indian economic specialists are still going over the government’s statement regarding its decision to erase the 80:20 rule and said that it is not clear if it will be replaced with a different rule.

The news out of India will not have a dramatic impact on Capital Economics’ forecast for gold prices to hit $1,300 an ounce by the end of 2015 and $1,400 an ounce by 2016, he said.

Bernard Dahdah, precious metals specialist at Natixis, said that markets will have to wait until the government releases its import data to see the true impact on the gold market. He added it is still not clear just how much gold has been imported into the country and if that has been enough to meet consumer demand.

Edel Tully and Joni Teves, commodity analysts at UBS, said that the lack of reaction in the gold market is “somewhat baffling” as it is positive news for the yellow metal. However, she added that uncertainty about potential future rules could be impacting some enthusiasm.

“Indeed, the removal of the main constraint on the supply chain should be positive for gold as it frees up the inflow of metal into India, where appetite has remained quite healthy,” they said. “Perhaps the question that needs to be asked is: If the RBI is going to scrap the 80/20 rule, what are they going to replace it with?

Analysts noted that there is speculation that India ended the 80:20 rule because of the sharp drop in oil prices. The controls on gold imports were established in 2013 as the government tried to reduce its massive current account deficit. However, the biggest drag has been energy prices.