By Kishori Krishnan Exclusive To Gold Investing News

Gold which lost nearly 4 per cent in last two trading sessions, seems to be moving towards a key support level of $875 an ounce which is the 100 DMA (Day Moving Average). Gold price closed at $893 on Friday, losing nearly $35 since Wednesday after the outcome of the Group of 20 meeting.

While these developments added to rallying global stock markets, pushing the precious metal lower, it fell below the important support of $900 as the G20 also agreed that some money for low income countries would be raised by the International Monetary Fund ^[1] (IMF) selling 400 tons of gold as previously planned.

The IMF is sitting on reserves of the yellow metal of 3,217 tonnes, valued at $95 billion. It is the third-largest official holder of gold in the world. The United States has the largest official reserves of gold in the world (over 8,000 tonnes), followed by Germany at around 3,400 tonnes. According to the IMF, the market value of its 103.4 million ounces (3,217 tonnes) of gold was $95.2 billion as on February 20, 2008. The proposal to sell 403.3 tonnes of the Fund's gold was agreed on last year as part of a plan to bolster the income of the multilateral organisation.

Gold has fallen the world over from its previous highs. In the Middle East too, gold has fallen 60 per cent over the last three months. Dubai, the biggest bullion market for trading gold in the Middle East, has been hit hard by the high price of gold. It is not just Dubai, the City of Gold, that has seen bullion markets reeling under recession. Plunging gold sales, volatility in prices and economic meltdown have forced several leading gold and diamond jewelers across Middle East cities to halt all their expansion plans.

"High gold prices and extreme volatility in prices are affecting us," said Joy Alukkas, chairman of Joyalukkas Group ^[2], a leading India-based gold and diamond retail chain with 40 major outlets across the world. He said the March 2009 earnings of Joyalukkas Group had fallen by 22 per cent. "Gold jewellery business is suffering under price fluctuations and sales of gold have drastically reduced across cities in the Gulf countries," he said.

In India too, there was no gold import for the month of March: this from a nation that prides itself as the world's biggest gold importer. According to the Bombay Bullion Association ^[3], India managed to export about 9 tonnes of gold coins in February and March. "India's domestic gold prices were about 3 to 4 per cent lower than the import cost. So some of the traders bought gold from the local markets and converted them into coins and exported it," the Association said.

Last week, the Association reported that for a second month in row, India imported no gold, even though the country is the world's largest consumer. Economic analyst Manasee S. Gokhale, who works with India's second largest commodity bourse the National Commodity and Derivatives Exchange, said March has been the second month where not a single tonne of gold has been imported, against the 21 tonnes of gold imported during the same period last year.

Analysts have forecast that imports of the yellow metal to India are set to plunge to the lowest levels for the decade in 2009.

Gold ETFs

Despite that, India's largest public sector bank - the State of Bank of India ^[4](SBI) - has launched a gold exchanged traded fund (ETF) with an ambitious plan to collect at least US$29.7 million. The Gold ETF is the sixth exchange traded fund in the yellow metal to hit the Indian markets. R S Srinivas Jain, senior vice president and chief marketing officer of SBI Mutual said that the bank is bullish on the growth of Gold ETFs in India.

"We feel that India has a great potential for more Gold ETFs. We are planning to raise good money through the exhange traded fund in gold," he said. He said the fund house - a joint venture between the SBI and France's Societe Generale Asset Management ^[5]- plans to market the scheme through the state-owned bank's branches.

Gold Rush

Interestingly, gold fever is gripping America again with record numbers of people taking to the hills and streams of California and other states hoping to strike it rich.

Membership of the Gold Prospectors of America Association ^[6]has risen 20 per cent in the past year, said general manager Ken Rucker. The numbers of people registering claims for mineral rights has also shot up. For the past two years, mining claims in California, the most gold-rich state, have grown by more than 3,000. Another 1,173 claims were filed in the first three months of 2009 alone, government figures show.

Driven by the soaring price of gold, now fetching near $900 an ounce, and the economic downturn, prospecting is booming in Alaska, Arizona, Washington state and Mexico. Would-be prospectors are flying in from all over the world in the hope of finding their fortune.

Company news

Mining company Anglo American plc ^[7](AAL.L) said it has priced a two tranche bond offering comprising $1.250 billion 9.375 per cent senior notes due 2014 and $750 million 9.375 per cent senior notes due 2019. The offering has been made to qualified institutional buyers in the U.S. and to investors outside the U.S. The company expects the offering to close on April 8. Earlier reports suggested that the financing arm of the mining group, Anglo American Capital Plc, was planning to sell $2.0 billion of two-part senior notes in the private placement market.

Goldman Sachs, Morgan Stanley and Royal Bank Of Scotland were the active joint bookrunning managers, while BNP Paribas and Barclays were the passive joint bookrunning managers for the sale. The economic crisis has wreaked havoc on mining companies, with demand showing a sharp decline. The latest announcement was reportedly spurred by enquiries from investors looking to buy the company's debt.

While announcing the full year results in February, the miner had said that as of December 31, 2008, it had undrawn bank facilities of $6.1 billion, cash deposits of $2.7 billion and commercial paper maturing throughout 2009 of $1.1 billion. "Anglo American's only significant debt repayment in the next year is a $3 billion revolving bank facility (of which $1.1 billion was drawn at December 31, 2008) which matures in December 2009," the company said.

Caza Gold Corp is on a mission to acquire mining properties in Mexico as part of the company's expansion plans. In its latest attempt, Caza Gold has unveiled its plans to acquire two large gold exploration properties in Mexico from Exmin Resources Inc for 400,000 common shares of Caza and a 1 per cent net smelter return royalty.

Caza also signed a letter of intent to purchase for $1.5 million Exmin's 30 per cent interest in the Mexican company, Minera Santa Maria de Moris SA de CV, that owns the 25,000 oz per year Moris gold mine. Hochschild Mining Plc is the 70 per cent owner and operator of the Moris mine. Caza Gold Corp is an unlisted reporting gold exploration and mining company.