Archived IMT (2010.02.25)

Today's RUMOURS about CHINA BUYING buying the remaining 200 bln tonne of gold have yet to confirmed, but they were reportedly effective in supporting the metal against USD considering the sharp rally in USD and JPY. A Chinese website (China Daily) denied the news while a Russian publication (Pravda) confirmed it. Why would a buyer of something announce its actions before the purchase? Either the purchase had already been done or the news was let out inadvertently. It is the same concept with those reports of Arab Gulf central banks diversifying into EUR away from USD back in 2006-07; or PBOC buying EUR and less USD. Theres no reason for a central bank to pre-announce a purchase of a currency (unless it was intervening). Going back to this weeks article on Gold & EUR http://bit.ly/989mRs, note the chart on the Gold Net Longs/Shorts indicates the decline in net longs has some way to go. And in each of the preceding peaks attained, net longs fell 70% off each peak before starting to recover. Net longs are currently down 30% from their Dec peak, which helps suggest will reach towards the 145K contracts territory from the current 188K. We maintain our 1025 target in gold for next month.