Gold on track to fulfill its multiple roles
Source: Sharps Pixley , Author: Austin Kiddle
Posted: Fri April 13, 2012 10:37 am

INTERNATIONAL. On Thursday, gold futures had its biggest 1-day rally of 1.22% since 21 February. This week gold has rallied more than 3%, helped by the re-assurance by two U.S. Fed governors that U.S. interest rate will remain low until late 2014 and the U.S. recovery is not 100% certain. Since the April's trough at US$1,613, gold has climbed US$67.

Market's hope of QE3 is re-ignited, fuelling commodities and S&P which rose 1.7% and 2.1% respectively while hurting dollar index which fell 0.7% since the Fed's comments came out. Dollar also declined after the U.S. Labour Department reported a higher than expected jobless claims of 380,000, a 2-month high.

While investors and traders are speculating whether the U.S. Fed will engage in QE3 or not and where gold price may head, the Euro crisis still has a major bearing on gold price. Europe is simultaneously facing three crises: banking, debt and economic growth crises.

According to Jefferies' Chief European economist, Europe needs to see enough growth to escape from the worst of its problems. To have growth ECB may end up engaging in a fully transparent quantitative easing policy, perhaps as soon as the third quarter, if economic conditions remain distressed.

The latest GFMS gold survey predicted that gold investment demand, especially physical gold demand, is the current key driver of gold prices and can reach 2,000 tonnes in 2012. Central banks which became net buyers of 400 metric tonnes in 2011, will remain gold buyers in 2012.

However, the head of Metals Analytics of GFMS also warned that production supply will continue to grow at 3% this year as producers are motivated by higher prices, producer hedging will probably go up after 10 years of de-hedging and investment demand will need to rise as much as $130 billion in order to fill the gap between supply (mining plus scraps) and fabrication demand.

GFMS predicts gold price will trade this year in the range of US$1,530 to US$1,920, the peak reached in early September, 2011, and will likely pass US$2,000 in early 2013.

For now, gold continues to fulfill its role as a safe asset, an inflation hedge and according to World Gold Council, a foundation asset in portfolios.

Note: SharpsPixley.com is the the online platform for Sharps Pixley Ltd, a physical precious metals trader.

SharpsPixley.com aims to bring you the latest gold news, live gold prices and gold charts and is an online shop for buying gold bars and gold coins.

Buying gold has never been easier or more attractive and is a great investment. SharpsPixley.com will allow those interested in buying precious metals to buy gold against the live spot price of gold, and SharpsPixley.com will keep you informed of all the latest market trends using our gold news feeds, our gold charting tools, and displaying live gold prices from around the world.

This article is republished with permission from Sharps Pixley.

Click here for more information about Sharps Pixley.

© Copyright Sharps Pixley 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. 


 

 

MIDDLE EAST BUSINESS COMMENT & ANALYSIS

date:Posted: September 22, 2014
UAE. Brightcove survey shows that a better video experience leads to more action, higher loyalty and more social sharing.
date:Posted: September 22, 2014
UAE. In a world careening out of control, children and teens affected by war yearn for the familiar - a roof over their heads, or a school schedule, or simply a family member to hold their hands.
date:Posted: September 22, 2014
UAE. The Middle East is the world's most dynamic infrastructure investment market; Qatar, UAE and KSA scored in the top third of the index; Qatar and the UAE top the ARCADIS ranking.
dhgate