It was reported from NEW YORK that gold prices may have retested the $1,100 support zone after the Fed’s surprise discount rate hike announcement, but the market has stabilized and Kitco Metals analyst Jon Nadler says there are more pressing issues on the plate right now.

Although Nadler agrees that Thursday’s announcement was “psychologically beneficial for the dollar, but not so hot for gold,” he maintains that the impact has been small so far.

“By this morning the realization that the discount rate is not the Fed funds rate started to sink in among speculators,” Nadler explained. He adds that “it was a surprise announcement, but one shouldn’t read too much into it… The hike only affects $14 billion worth of borrowing.”

At the moment, Nadler, like many gold observers, is more focused on the IMF’s (International Monetary Fund) decision to sell 191.3 tonnes of gold from a previously planned sale of 403 tonnes of gold.

That move could indeed hurt gold prices. “This is a more critical situation because the market is already in surplus supply mode,” Nadler explains.

Nadler notes that he isn’t completely ignoring the Fed discount rate hike announcement, given that it forecasts a possibly more qualitatively important Fed funds hike between August and October. This signals that the dollar could rise against the Euro, putting pressure on gold prices.

On a long-term basis, Jon Nadler  is looking at lower gold prices as he sees continued dollar strength – as well as the Fed shift towards an exit strategy whereby it is less accommodative and more inclined to mop up excess liquidity. Still, Nadler argues that no downward spiral in gold prices is on the horizon.

In January, Nadler projected a price range of $880 to $1,280 an ounce for the next six months, taking volatility into account. It sees a price range of $970 to $1,170 in the short-term.

Nadler continues to encourage his investors to hold a 5% to 10% core allocation in gold, even if prices edge lower. “There’s no reason to shift out of that,” he said.

Gold futures for April delivery was falling $2.8 to $1,115.90 an ounce at the Comex division of the New York Mercantile Exchange Friday.

It’s hard to believe so when some of the smartest and wealthiest financial investors keep buying it. Gold being a tangible asset not a paper one is considered to be valuable in times of declining paper assets.

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Multibillion dollar investments are being made in gold today.  Only one could think that the prices are still relatively low.  Most investment portfolios do not have Gold in them.  With today’s investment gold rush, a shift of portfolio funds may cause prices to jump to $1300.

It was reported from MUMBAI Commodity Online that after tasting success with its campaign to sell gold coins across India’s post offices, the World Gold Council (WGC) is getting ready to launch a new version of gold traded on paper in India. The new form of paper gold, just like the Gold ETFs, will be launched in the Indian market in the next few months.

According to WGC India Managing Director Ajay Mitra, India offers tremendous potential not just in the sale of physical gold, but all forms of gold transaction methods. While India has six Gold ETFs successfully running and attracting good investments, WGC is talking to a number of players to launch a new version of gold traded on paper.

India is one of largest consumers and importers of the yellow metal in the world. While most Indians prefer buying gold jewellery and gold coins as investment, a large number of investors are now scouting for investment-led gold instruments like ETFs.

“We hope to launch newer paper gold – gold traded on paper in India by June this year in India. The paper gold will be stored by a custodian, whoever is channelising that venture,” Mitra said.

He said India Post, the post services department of the Indian government could be an ideal partner for the distribution of the new Gold ETFs. India Post has partnered WGC in promoting and selling gold coins across hundreds of post offices in the country.

The WGC official said that the apex gold body has decided to launch the new paper gold in India as consumers have been saying that storing physical gold at their homes is becoming very inconvenient.

The paper gold instrument will help investors and customers in getting rid of storing their precious gold. India Post officials said as per the new initiative, a customer can buy paper gold from any of their branches and keep it as safe investment.

Bullion experts believe the new paper gold idea from WGC will drive up gold investment demand in India.

“It is going to be a wonderful idea, if a new form of paper gold can be launched in association with WGC in India. I am sure thousands of people will just buy paper gold from post offices instead of physical gold from jewellery shops as investment. This will push up gold demand in India,” Kiram Mehta, a bullion analyst in Mumbai told Commodity Online.

Mehta said different types of paper gold instruments can be launched in India in tie ups with broking houses, institutions and banks. “This is a really big opportunity that can catch up the investor appetite for gold in India,” he added.

Across the world, paper claims to physical gold have so proliferated during the past two decades.

It was analysted that expect platinum and palladium, used in catalytic converters, to rise further, after gaining 14 percent and 28 percent respectively since late December, but also warn of a correction on concerns over the still ailing auto sector.

The platinum group metals (PGM) rise and the dollar’s dip against a basket of currencies lifted gold, but analysts said fresh impetus was needed to push bullion higher as there was little support from currency markets with the euro under pressure.

Spot platinum rose as high as $1,626.00 per ounce, its highest since August 2008, and was at $1,612 an ounce by 2:52 p.m. EST, up about 1 percent on the day.

Spot palladium rose as high as $459 an ounce, its highest since early July 2008, and stood at $457.50 in late trading, up about 1.1 percent from Friday.

“We saw the opening of the U.S. ETFs this month, that’s proved relatively popular so far. We’ve seen a little bit of switching from gold to PGMs overall, so that’s driven the price,” said Commerzbank trader Rory McVeigh.

A U.S. subsidiary of London’s ETF Securities launched the products last Friday, and uptake has been healthy. About 170,000 ounces of metals were added to the products in the first two trading sessions.

But McVeigh said the lack of a solid recovery in the car industry could mean once the investment demand is saturated, both metals could be heading for a sharp correction.

“When it’s investment driven, the exit could be a lot harsher than the rise,” he said, but he did not rule out a rise to $1,800 an ounce for platinum in the short term.

Gold prices were up slightly but rises were limited as the euro remained under pressure due to financial problems in Greece and concerns over the potential impact on the single currency.

Investors have also kept to the sidelines because New York markets were closed on Monday for Martin Luther King Jr. Day.

Spot gold inched up to $1,132.50 per ounce compared with $1,129.90 an ounce late in New York on Friday. U.S. gold futures for February delivery were at $1,134 per ounce, up 0.25 percent.

“Until we get fresh momentum based on an event or data, gold is going to continue to struggle as long as the dollar is being preferred versus the euro,” said Tom Kendall, precious metals strategist at Mitsubishi.

Spot gold hit a five-week high of $1,161.50 on January 11. Gold has fallen 2.5 percent since then, as a rise in the greenback hurt investor sentiment.

The high gold price has hurt Italian jewellers, who are now turning to alternative materials such as leather, textiles and ceramics to offset prices, an industry executive at the Vicenza trade fair said.

Holdings by the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 0.914 tonnes to 1,112.836 tonnes on Jan 15.

Silver prices were at $18.61 an ounce versus $18.36 an ounce late in New York on Friday.

It was reported that gold, little changed in London today, may climb as concern about the soundness of Greece’s public finances boosts the metal’s appeal as a haven. Palladium and platinum rose to the highest prices in at least 17 months.

European finance ministers meet today to discuss Greece’s budget deficit. The country’s worsening finances last month prompted credit-rating companies to cut its creditworthiness. The US Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.3 per cent today. Gold typically moves inversely to the dollar.

“The market is very concerned about the situation in Greece,” said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. “Gold is having speculative interest, rather than real physical demand.”

Gold for immediate delivery added $US2.65, or 0.2 per cent, to $US1,133.57 an ounce at 4:38 p.m. local time, paring a climb of as much as 0.6 per cent. Bullion for February delivery gained 0.3 per cent to $US1,133.50 in electronic trading on the New York Mercantile Exchange’s Comex division. Floor trading is closed today for the Martin Luther King Jr. holiday.

The metal declined to $US1,134.50 an ounce in the afternoon “fixing” in London, used by some mining companies to sell production, from $US1,135.75 at the morning fixing.

It was said from the Bombay Bullion Association in Mumbai on Wednesday that gold imports declined by nearly 24 per cent in 2009 at 343 tonne, against 449 tonne in 2008.

“The country has imported 343 tonne gold in 2009, compared to 449 tonne in 2008,” Bombay Bullion Association President Suresh Hundia said.

India has remained the largest gold importer in the past few years, but took a hit in 2009 due to soaring prices, he said.

Commenting on price trend, Hundia said gold may see some correction and may touch Rs 16,400-16,500 per 10-gram in the near future.

The precious metal plunged Rs 245 to Rs 16,785 per ten grams at the Mumbai bullion market today on emergence of hectic offloading by stockists and speculators.

The sudden bout of selling was attributed to heavy profit-taking fearing a price correction in the overseas markets following China’s tightening of its monetary policy yesterday, a trader said.

Pure gold (99.9 purity) fell by a similar margin to end at Rs 16,870 per ten gram from Rs 17,115 previously.