Gold
Gold was up $15.40 to $812.40 per ounce in New York yesterday and silver was up 44 cents to $14.99 per ounce. It traded sideways in Asia and has sold off in European trading and is at $803.50 per ounce at 1200 GMT. Gold is flat in GBP and EUR. It is trading at £392.90 GBP (from £393) and €549.80 EUR (down from €550).
Gold is well supported near the recent double lows at $790 per ounce and below that at the 50 day moving average at $767. Unless there is a sharp sell off in oil and a sharp sustained rally in the dollar, gold is unlikely to suffer a sharp sell off and will remain strong and may challenge recent highs in the near term.
The World Gold Council (WGC) confirmed yesterday that gold demand remained very robust in the third quarter. Global gold demand in the third quarter rose a very significant 19 percent year-on-year to 947.2 metric tons on the back of improved jewelry consumption and more importantly, robust inflows into bullion investment funds.
The World Gold Council thus confirmed that real physical demand is fueling this bull market and it is not a speculative bubble.
A surge in investor interest on top of robust jewellery demand made Q3 2007 a further quarter of strong demand for gold. Jewellery demand rose by 6% in tonnage terms over Q3 2006 and by 16% in dollar terms. However, identifiable investment demand was nearly double year-earlier levels in tonnage terms due to a record inflow into Exchange Traded Funds and similar products. The rise in dollar terms was 115%.
The quarter saw a change in demand patterns as investors took over from jewellery buyers as the dominant force in September. The slowdown in jewellery demand was sharper in India than in China (where the price rise had little effect) or in the Middle East.
Industrial and dental demand in Q3 was little changed from year-earlier levels. The supply of gold was more plentiful than in recent quarters due to a sharp reduction in de-hedging by mining companies and to higher central bank sales and not due to increased gold production. As central bank sales slow and they become net buyers this will also contribute to higher prices.
Forex and Gold
The dollar is largely flat against the EUR at 1.462 (from 1.466) but has strengthened against GBP at 2.045 (from 2.067). The slowdown in the UK housing market and economy is likely to lead to interest rate cuts in the UK (despite record fuel and food prices and rising inflation).
Traders believe the US Federal Reserve will decrease interest rates again in December. Federal fund futures currently price in a 98 percent chance of a 25bp rate cut in December.
Decreasing interest rates in an increasingly stagflationary macroeconomic climate is very inflationary and very bullish for gold as it was in the 1970s.
Silver
Silver is trading at $14.82 at 1200 GMT.
PGMs
Platinum was trading at $1419/1424 (1200 GMT).
Spot palladium was trading at $364/368 an ounce (1200 GMT).
Oil
Light, sweet crude for December delivery rose to $94.16. Oil steadied after rebounding strongly yesterday, as traders awaited U.S. data expected to show crude stocks fell for a fourth straight week last week.
Gold was up $15.40 to $812.40 per ounce in New York yesterday and silver was up 44 cents to $14.99 per ounce. It traded sideways in Asia and has sold off in European trading and is at $803.50 per ounce at 1200 GMT. Gold is flat in GBP and EUR. It is trading at £392.90 GBP (from £393) and €549.80 EUR (down from €550).
Gold is well supported near the recent double lows at $790 per ounce and below that at the 50 day moving average at $767. Unless there is a sharp sell off in oil and a sharp sustained rally in the dollar, gold is unlikely to suffer a sharp sell off and will remain strong and may challenge recent highs in the near term.
The World Gold Council (WGC) confirmed yesterday that gold demand remained very robust in the third quarter. Global gold demand in the third quarter rose a very significant 19 percent year-on-year to 947.2 metric tons on the back of improved jewelry consumption and more importantly, robust inflows into bullion investment funds.
The World Gold Council thus confirmed that real physical demand is fueling this bull market and it is not a speculative bubble.
A surge in investor interest on top of robust jewellery demand made Q3 2007 a further quarter of strong demand for gold. Jewellery demand rose by 6% in tonnage terms over Q3 2006 and by 16% in dollar terms. However, identifiable investment demand was nearly double year-earlier levels in tonnage terms due to a record inflow into Exchange Traded Funds and similar products. The rise in dollar terms was 115%.
The quarter saw a change in demand patterns as investors took over from jewellery buyers as the dominant force in September. The slowdown in jewellery demand was sharper in India than in China (where the price rise had little effect) or in the Middle East.
Industrial and dental demand in Q3 was little changed from year-earlier levels. The supply of gold was more plentiful than in recent quarters due to a sharp reduction in de-hedging by mining companies and to higher central bank sales and not due to increased gold production. As central bank sales slow and they become net buyers this will also contribute to higher prices.
Forex and Gold
The dollar is largely flat against the EUR at 1.462 (from 1.466) but has strengthened against GBP at 2.045 (from 2.067). The slowdown in the UK housing market and economy is likely to lead to interest rate cuts in the UK (despite record fuel and food prices and rising inflation).
Traders believe the US Federal Reserve will decrease interest rates again in December. Federal fund futures currently price in a 98 percent chance of a 25bp rate cut in December.
Decreasing interest rates in an increasingly stagflationary macroeconomic climate is very inflationary and very bullish for gold as it was in the 1970s.
Silver
Silver is trading at $14.82 at 1200 GMT.
PGMs
Platinum was trading at $1419/1424 (1200 GMT).
Spot palladium was trading at $364/368 an ounce (1200 GMT).
Oil
Light, sweet crude for December delivery rose to $94.16. Oil steadied after rebounding strongly yesterday, as traders awaited U.S. data expected to show crude stocks fell for a fourth straight week last week.
