2009-09-17

Gold remains well supported despite a large net speculative long position

















Gold attempted to break lower yesterday, touching USD992 in New York. Expected a larger pull-back, towards the mid- USD980s. Instead, gold powered ahead to over USD1,018 this morning. Gold remains well supported despite a large net speculative long position. To be expected this support to continue into Q4:09 and Q1:10; target price for Q4:09 is USD1,100 (Report from Commodities Daily dated 7 September 2009).

Also, expected more dollar weakness into year-end. However, there is a great deal of speculative activity in the gold market. ETF gold holdings have risen by only 33 tonnes since the start of September, and, according to CFTC data, net speculative long positions rose by 161 tonnes during the first week of September alone. Since then, this could even have increased. Speculative futures activity far outstrip ETF demand. Despite higher seasonal demand for jewelery demand, base on some report from US they do not believe that jewelery demand is strong right now. While gold has been defying a break lower, the risk remains for some pullback. They would buy gold on such a break lower.

Gold jumped further in Asia this morning; the next target is USD1,033. While still see more upside for gold, the risk of a correction lower remains. Most of the investor would buy into such a correction. Base on the latest chart, support for gold is at USD1,000 and USD990, and resistance at USD1,020 and USD1,023.

Public Bank Gold Investment Account as at 16/09/09 3:50 PM

Selling PriceBuying Price
1 gramRM 116.7300RM 112.1900

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