Gold Price Surged on President Obama’s Re-election; Markets Look to Fiscal Cliff Solution and Greek’s Votes
The U.S. Comex gold futures dropped $40 last Friday and ended at
$1,675.20; the last time gold ended below $1,700 was on 5 September.
The gold futures rebounded 2.38 percent on Monday and Tuesday and in the
early afternoon of Asian trading, gold futures rose further to
$1,724.30, prompted by the re-election of the U.S. President Barack
Obama. After rising 0.16 percent and 2.05 percent respectively last
week, the S&P 500 Index surged 1 percent while the Euro Stoxx 50
Index retreated 0.44 percent. The Dollar Index rose 0.66 percent last
week and is now trading weaker during Wednesday morning in Asia at
around 80.3.
Gold futures plunged below $1,700 last Friday when the U.S. October
non-farm payrolls rose by 171,000 compared to the expected 125,000 and
the rise of 148,000 in September. Gold traders were concerned that QE3
may end sooner than expected should the labour market continue to
recover strongly. Also a Romney presidential win may boost dollar and
lead to a more hawkish monetary policy.
There are signs that physical demand for gold has been improving. In
September, Chinese gold imports from Hong Kong rose 23 percent
year-on-year and rose 30 percent from August. Year-to-date to
September, gold imports into China from Hong Kong rose from 203,646 kg
in the same period last year to 581,848 kg, suggesting investors and
institutions have upped the demand for gold in their asset allocation.
The Indian consumers are expected to scoop up gold on Dhanteras on 11
November, an auspicious day to buy gold. On the trading side, the CFTC
non-commercial net positions in gold have dropped in three consecutive
weeks, reflecting a cleaner positioning in gold according to Barclays.
Now that the Americans have decided on Obama, gold price is expected to
rise further on expectations of more economic stimulus. However, market
attention will also turn to the uncertainties caused by the U.S. fiscal
cliff totalling more than $600 billion beginning 2013 and the outcome
of the Greek’s vote on the austerity measures on Wednesday.
Austin Kiddle
Sharps Pixley, London
www.SharpsPixley.com
07 Nov 2012 | Categories: Gold
