Central Banks and Hedge Funds are Gold’s Best Friends
After falling 0.94 percent last week, the U.S. Comex gold futures
rebounded 0.52 percent this week and ended at $1,723.60 on Tuesday. The
S&P 500 index and the Euro Stoxx 50 index surged 2.05 percent and
3.39 percent this week. Crude oil futures have been especially
volatile, surging 3.01 percent on Monday but falling 2.83 percent on
Tuesday due to rapid development in the Middle East.
Gold surged on Monday as the market anticipated a solution to the U.S.
fiscal cliff while Israel-Hamas fighting intensified. Gold price
retreated on Tuesday as soon as there were some signs of a cease-fire.
Situation there remains fluid and uncertain, underpinning the gold
price.
The U.S. housing starts beat all estimates and rose 3.6 percent in
October at an annual pace of 894,000. Ben Bernanke echoed in his New
York speech today that residential investment could spur economic
recovery and jobs growth. He warned that the fiscal cliff would throw
the U.S. back into a recession and reiterated that the Fed’s policy
would remain accommodative until the economy shows a firmer recovery.
The Bank of Japan kept interest rate between zero and 0.1 percent and
did not add to its monthly purchases of government bonds. Market
expects that the BOJ will be under pressure to ease further in the
December meeting which will happen three days after the Japanese Prime
Minister election.
Gold investors are cheered by the report that the gold-backed ETP
holdings reached a new record at 2,604.933 metric tons as of 19
November. India’s gold import has rebounded by $2.5 billion during
September and October, overcoming the rise in the import duty.
Festivals and wedding seasons would continue to support Indian demand in
the coming months. The U.S. SEC filings showed that Soros’ gold
holdings surged 49 percent in Q3 as prices rose 10.4 percent last
quarter. The IMF also reported that central banks have added gold to
their reserves continuously for 19 months.
Now that France has lost its triple-A rating a second time, the stake
has been raised for the EU leaders to reach an agreement on the 2014 to
2020 EU budget and put Europe back on a path of recovery as the summit
begins on 22 November.
Kelly Smith
Sharps Pixley, London
www.sharpspixley.com
21 Nov 2012 | Categories: Gold
