Gold News

Gold Price Flat with Silver as Retail Investors Buy, Chart Analyst Targets $1500

GOLD PRICE losses of 0.8% for the week were erased Wednesday morning, taking the metal back to last Friday's finish of $1317 per ounce in what traders called "very dull" trade.
 
By lunchtime in London, and just like the gold price, silver held unchanged for the week so far, trading back down to $21.90 after a brief spike above $22.00.
 
World stock markets were meantime flat overall, while commodity prices reversed Tuesday's small drop.
 
Ahead of tomorrow's monthly policy vote by the European Central Bank, the Euro currency crept back above $1.36 following stronger-than-forecast service sector data but a drop in retail sales.
 
That nudged the gold price in Euros down €1 per ounce to €975.
 
The Dollar gold price "has seen a lower high for the past daily 6 consecutive trading sessions," notes Scotiabank's latest technical analysis of the gold charts.
 
"We believe the market is selling gold on any bounce while it remains below $1330."
 
But last week's gold price dip to $1310 now means Bank of America Merrill Lynch strategist MacNeil Curry is "long gold", recommending clients buy the metal because "the medium-term trend has turned bullish."
 
Citing "the impulsive gains from the $1251 low of Oct.15 low, and the break of the [two-month] downtrend," Curry is targeting a possible run up to $1500 per ounce – which he sees as "long-term resistance."
 
"The jury is still out," counters the latest gold price analysis from Commerzbank's Axel Rudolph in Frankfurt, "as to which direction the medium-term trend will take.
 
"But we still favour weakness."
 
Silver prices meantime "remain longer term bearish while trading below the $23.12 resistance area," he adds.
 
Australia's Perth Mint, which refines some 300 tonnes of gold bullion per year, said today that gold coin sales rose 13% in October from September.
 
"We're desperately trying to keep up with production," the Wall Street Journal quotes Ron Currie, head of sales and marketing, who adds that the Perth Mint "sold out" of 1-ounce lunar silver coins "in just over a month."
 
Although gold demand from Western retail investors grew in October, however, money-managers using the SPDR Gold Trust to gain exposure to gold prices cut their holdings by a further 3.6% last month.
 
Holdings in the SPDR (ticker: GLD), the world's largest exchange-traded fund by value at its peak in 2011, ended Tuesday unchanged from Monday at 866 tonnes, a 57-month low.
 
Looking at gold options contracts – which give traders the right to buy or sell at certain prices in the future – "We expect lower gold prices for the coming years," says a note from Dutch bank ABN Amro's analysts.
 
"The bias [amongst options traders] turned negative in October 2012...[and while] the recovery of gold prices since June has resulted in a less negative bias, the market has not come close to being neutral."
 
Meantime in India – the world's No.1 consumer gold market, but likely to be overtaken in 2013 by China – premiums above London's benchmark gold price held on Wednesday around $70 per ounce, says Reuters, after halving from last week's record levels as the traditionally strong Diwali festival ended.
 
"Demand is tapering off," the newswire quotes Bachhraj Bamalwa of the All India Gems & Jewellery Trade Federation. "There won't be buying for another week" until the Hindu wedding season returns.

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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