Gold in exchange-traded products (ETPs), increased this week to a record 72.49 million ounces

The gold price bounced back on Tuesday after yesterday’s modest sell-off as the U.S. dollar retreated against a composite of the world’s leading currencies this morning.  The spot price of gold rose as much as $14.18, or 0.8%, to $1,740.28 per ounce while the U.S. Dollar Index slipped 0.5% to 80.001.  The SPDR Gold Trust (GLD), the most liquid gold price proxy in the equity markets, advanced $1.24, or 0.7%, to $168.53 per share.

With the gold price surging higher in recent weeks, sentiment toward the yellow metal has risen as well.  According to Reuters, holdings of gold in exchange-traded products (ETPs), increased this week to a record 72.49 million ounces.  Furthermore, total holdings of gold have climbed by close to 3.5 million ounces on a year-to-date basis, of which 2.7 million ounces have moved into ETPs in just the past month.

Commenting on the rise in gold holdings, Edel Tully – a precious metals strategist at UBS – stated that “With a good portion of gold’s recent strength accounted for by the sharp increase in spec positioning, this certainly raises concerns on the longevity of the move, especially with fundamental buying virtually out of the picture…But the fact that the (ETP) camp – a relatively less-fickle group of buyers – has also been giving gold its vote of confidence offsets some of those worries.”
Looking ahead for the gold price, investors will be keeping a close eye on the German Federal Constitutional Court – which on Wednesday will provide its decision on the legality of the European Stability Mechanism (ESM) – the proposed permanent aid program designed to provide financial assistance to euro zone nations suffering from the sovereign debt crisis.

The attention will then shift on Thursday to the Federal Reserve, which will hold its next Federal Open Market Committee (FOMC) meeting.  While many economists expect the Ben Bernanke-led central bank to announce further monetary stimulus – likely in the form of a third round of quantitative easing (QE3) – the strong performance of the financial markets this year, as well as the ability of the U.S. economy to thus far avoid a recession, may keep the Fed on hold for at least the time being.

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also wai...
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad ...
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the...
Read more