November Events - Indian Festivals Demand, Greece and the U.S. Election - Hold the Key to Gold Price
The U.S. Comex gold futures bounced up and down quietly and were
essentially flat in the past two days, ending at $1,712.10 on Tuesday.
The U.S. stock markets were closed on Monday and Tuesday as Hurricane
Sandy, straddling 900 miles, swept through New York and New Jersey and
other parts of the Northeast region. The Euro Stoxx 50 index rebounded
about 0.80 percent after dropping 1.81 percent last week. The Dollar
Index fell 0.38 percent on Tuesday after rising 0.2 percent on Monday on
the report that the hurricane damage may be a little less than
projected.
A couple of economic news helped to support gold prices. Last Friday,
the U.S. reported Q3 GDP growth at 2 percent p.a., higher than the
Bloomberg median forecast of 1.8 percent. Higher growth and therefore
more inflation may help gold price. On 30 October, the Bank of Japan
further boosted its monetary policy to combat GDP slowdown by expanding
its asset purchase program by 11 trillion Yen to 66 trillion Yen while
offering unlimited low interest rate loans at the overnight call rate
currently at 0.1 percent. The October China Flash PMI rose to 49.1 from
47.9 in September while the industrial profits rose 7.8 percent
year-over-year in September after declining in the previous 5 months,
indicating the economy may rebound in Q4.
In November, Europe will strive to keep Greece within the Euro zone and
the Troika will have to decide if Greece meets the prerequisite
conditions for a Euro 130 billion aid. The October Euro zone economic
sentiment indicator came out at 84.5, slightly better than expected.
Still the German Chancellor Merkel and the IMF Managing Director Lagarde
both warned of the fragile global economy and the untenable debt levels
in major economies. In the U.S., Hurricane Sandy may cause a damage of
$20 to $25 billion according to private estimates although some
rebuilding effort might mitigate the GDP losses.
Some buying on dips was seen as gold futures bounced decidedly off the
$1,700 handle. Gold-backed ETF holdings are still at a record high
level while there are signs that physical demand has increased in India
and China. The Indian peak festival seasons which include Dussehra and
Diwali and the marriage seasons may help to bolster gold prices from
October to early next year.
Kelly Smith
Sharps Pixley, London
www.sharpspixley.com
31 Oct 2012 | Categories: Gold
