Gold Pushed and Pulled by Central Bank Actions, Physical and Investors Flow
The U.S. Comex gold futures fell 0.43 percent this week to $1,377 on
Tuesday after trading as high as $1,423 on 6 June. The Dollar Index
fell to 81.034 on 11 June after plunging 2.05 percent last week. The
S&P 500 index and the Euro Stoxx 50 index fell 1.05 percent and 1.50
percent respectively in the past two days. Emerging markets equities
were harder hit, falling 2.68 percent in the same period. The Japanese
Yen surged 1.59 percent while the Euro Dollar rose 0.71 percent against
the U.S. Dollar this week.
Concerns about Central Bank Policies
Investors are preoccupied by what the global central banks’ next moves
will be. The U.S. May payrolls rose 175,000 versus 149,000 in April
while the May unemployment rate climbed 0.1 percent to 7.6 percent. The
more positive data cheered the stock market and added to the
expectation that the Fed would taper its QE programme sooner than
expected. The Bank of Japan governor recently said that he did not see
the need to add more stimulus measures or additional tools to calm down
the bond market. The BOJ will stay pat to increase the monetary base by
60 to 70 trillion yen a year as well as provide a one-year fixed rate
loan to the private sector. The BOJ recently also revised up its
economic growth assessment from 0.9 percent in Q1 to 1.0 percent.
Global stocks and gold have priced in more central bank stimulus actions
although the policy makers are unlikely to do more in the short-term.
Investors’ Positioning in Gold
The net combined positions in gold by speculators rose 17.5 percent for
the week ending 4 June after reaching a four-and-a-half year low on 28
May. The short positions fell for the first time since mid-April.
According to Bloomberg, the gold-backed ETP holdings fell to a two-year
low of 2,127 metric tons as of 11 June. Barclays expects that while
physical demand from Asia remains healthy, the ETP net redemptions will
likely outpace the physical demand for gold.
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12 Jun 2013 | Categories: Gold
