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All Posts Tagged With: "gold market"

WGC: STRONG OUTLOOK FOR GOLD DEMAND FOR REMAINDER OF 2010

Global gold consumption for 2010 will be higher than 2009 as a result of increasing levels of demand in India and China, sustained global demand for gold investment, together with growth in jewellery and industrial demand, the World Gold Council (“WGC”) said.

According to the WGC’s Gold Demand Trends report for Q3 2010, published today, demand for gold in the final quarter of 2010 will be driven by the following factors:

* Increasing demand by the world’s two largest markets, India and China, as rising income levels, high savings rates and strong economic growth continue to push up consumption.

* Gold jewellery demand is likely to exceed that of 2009 due to an anticipated recovery in India, the most significant gold jewellery market, and continuing strength in China. While jewellery demand may face challenges ahead, the latest figures show that demand in key markets has shown resilience in the face of higher prices levels.

* Concern over fiscal imbalances and currency tensions will continue to support investment demand for gold. Aside from the recent additional US$600 billion of quantitative easing by the US, the weakening of the US dollar and associated fears of inflation, demand is also likely to be driven by higher gold price expectations, as well as increasing availability and accessibility of gold investment products to retail investors.

* Industrial demand, which has returned to long-term levels, is expected to remain firm on the back of renewed growth in the electronics industry, due to the majority of semi-conductors being wired by gold.

Marcus Grubb, Managing Director, Investment at the WGC commented:

“Healthy gold demand growth in the third quarter occurred in the context of record international prices, demonstrating how consumers, particularly in India and China, are continuing to appreciate the enduring value of gold. The rediscovery of gold’s properties as both a currency and a monetary asset have been brought into sharp focus. Quantitative easing has forced the adjustment of global imbalances into currency markets and the resulting currency conflict is positive for gold. In addition, we believe demand will be facilitated by the growing number of channels that serve to make gold more easily accessible to a greater number of investors.” (more…)

Gold tops $1,350 Before Fed Meeting Next Week

Markets await more money printing and key midterm elections

GDP meets expectations

Gold broke $1,350 today just before data showed the U.S. gross domestic product grew by 2 percent in the third quarter on high consumer spending, meeting economic forecasts. In a big meeting Tuesday – also Election Day – the Federal Reserve will discuss the prospect of further quantitative easing, or QE, which will have a major impact on the dollar, inflation expectations, and gold prices. “The Fed meeting next week has been dominating the markets,” said Standard Bank analyst Walter de Wet. “We think the gold market has priced in around a $500 billion QE exercise by the Fed,” he said. “If the Fed comes out with a higher figure, we think gold will move higher.”

The trillion-dollar question: How much money will the Fed print next?

All eyes are on the Fed and its next anticipated round of QE. Most experts agree that some form of QE will be launched at the conclusion of a two-day meeting of its policy-making committee next Wednesday. It’s now just a question of how many billions worth of assets it will purchase and how much the financial markets have already priced in that QE.

“Shock and awe”?: Goldman Sachs thinks the Fed ultimately might buy $2 trillion of assets – a figure close to its “shock and awe” purchase of $1.7 trillion in longer-term Treasury and mortgage-related bonds at the height of the financial crisis. “We expect an announcement of $500 billion or perhaps slightly more over a period of about six months,” said Goldman economist Jan Hatzius. “The key question, however, is not the size of the first step, but how far Fed officials will ultimately need to move to achieve their dual mandate of low inflation and maximum sustainable employment.” The Fed also might announce a monthly purchase rate of perhaps $100 billion that will remain in place until the outlook for jobs and inflation improve “significantly,” he wrote. Goldman thinks as much as $4 trillion of additional asset purchases might be needed to bring inflation and unemployment into line with the Fed’s targets.

Likewise, Bank of AmericaMerrill Lynch Global Research has forecast $1 trillion in QE, and a Reuters poll showed Wall Street analysts expect the Fed to buy between $80 billion to $100 billion in assets per month.
Or “a measured approach”?: However, on Tuesday, The Wall Street Journal downplayed expectations of a major round of QE: “The central bank is likely to unveil a program of U.S. Treasury bond purchases worth a few hundred billion dollars over several months, a measured approach in contrast to purchases of nearly $2 trillion it unveiled during the financial crisis. … Officials want to avoid the ‘shock and awe’ style used during the crisis in favor of an approach that allows them to adjust their policy, and possibly add to their purchases, over time as the recovery unfolds.”

Gold stands to gain: The launch of any significant QE should have an uplifting effect on gold prices. Gold could rise to $1,400 an ounce and the dollar could lose another 2 percent to 3 percent if the Fed buys $500 billion over the next six months, HSBC analysts said Monday. The Fed could eventually buy up to $2 trillion in bonds – way more than the government will issue this year, according to HSBC.

Unbottling the inflation genie

In leading the Fed into uncharted monetary territory, Chairman Ben Bernanke is risking unleashing 1970s-style inflation – against which gold is your best protection. “By reducing real interest rates and trying to break the psychology of ‘Why spend today when I can buy goods cheaper tomorrow,’ they are hoping to drive growth that would be more commensurate with a pickup in employment,” said Miller Tabak & Co. chief economic strategist Dan Greenhaus. “The risk is a late-1970s type of scenario where the inflation genie gets out of the bottle.” (more…)

Gold to Shine in Forum at World’s Fair of Money

Two leading experts on the acquisition and trading of gold coins and bullion will provide a wealth of inside information on those subjects – free of charge – during the ANA World’s Fair of Money (www.WorldsFairOfMoney.com), the year’s biggest coin show, on Friday, August 13, 2010, at the Hynes Convention Center in Boston, Massachusetts.

The experts, Scott A. Travers and Maurice H. Rosen, will be the featured speakers at Coin Collector’s Survival® Conference 2010, a 90-minute seminar that will give attendees useful information on how to “survive and thrive during the decade of gold.”

The Survival Conference will start at 10:30 a.m. August 13 in Room 200 of the convention center. Admission is free, and everyone who attends will receive a copy of one of the bestselling books authored by Travers, as well as a newsletter published by Rosen. The free books and newsletters will be vintage copies of earlier editions.

Travers is a nationally known New York City coin dealer, author and consumer advocate who has written more than half a dozen award-winning books, including The Coin Collector’s Survival Manual®, a hobby bestseller that will have its seventh edition published by Random House in November. The New York Times has described him as “the Ralph Nader of numismatics” for his consumer activism.

Rosen is a prominent professional numismatist and coin market analyst from Plainview, New York, whose influential Rosen Numismatic Advisory is recognized perennially as the outstanding newsletter in the field of rare coins and precious metals. He forecasts in the soon-to-be-published edition of the Survival Manual that “by the end of 2020, the price of gold in U.S. dollars will be $5,000 to $10,000 per ounce.”

Travers and Rosen both foresaw the tremendous advance in the market value of gold well before it began. Travers was predicting $1,000-an-ounce gold in books and articles several years beforehand, when the price was less than half that amount and barely one-third its present level of about $1,200.

Also taking part in the symposium will be Jerry Jordan, award-winning news editor of The Examiner, a newspaper in Beaumont, Texas, who wrote a series of articles exposing apparent abuses by traveling gold buyers. Jordan’s four-part series revealed that in many cases, the itinerant buyers – operating out of hotel suites – apparently offered unwary sellers a small fraction of the true value for their gold coins and jewelry.

Gold Reaches New Heights at $1130 oz. Where Does It Go From Here?

This morning Gold has surged again to a record high of over $1130 per oz as safe haven buying and a continuing weak dollar fuel continued demand. But where is gold heading?

gold_bug_1In an interview with The Daily Telegraph during a London gold conference, Barrick President Aaron Regent said that one could argue that Earth has reached “peak gold,” as new supplies of the ore are increasingly difficult to find.

“The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday,” the paper noted. “The key driver over recent days has been the move by India’s central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.”

Bloomberg reported that  “The metal seems set to extend higher as record low interest rates, inflation concerns, central-bank purchases and falling mine output draws a broad spectrum of investment demand,” said James Moore, analyst at TheBullionDesk.com, in a note to clients.

“We are looking to see if the dollar index breaks lower, which could push gold above $1,150 and on towards $1,180,” he said.

Another analyst stared that “This is a different type of gold rally, with support coming from both sides of the market — investment [and] fundamental,” said Darin Newsom, a senior analyst at Telvent DTN. “A certain portion of the buying interest has come from the continued weakness of the dollar, but there is more to it than that, there is some ‘safe haven’ buying as well, but with copper holding firm and the Baltic Dry Index rallying, the Chinese economy seems to be gaining strength,” boosting investor confidence, he said.

And further confirmation of the  retail demand for gold comes from Laura Sperber in her Baltimore Coin Show Market Report. Sperber observered that”if you had gold, you sold”. ALL gold, was selling briskly. The demand reminded us of 1980″.

Also, news from last week that India had purchased 200 tonnes of gold from the IMF was solid confirmation that demand may be here to stay. The view that central banks will continue to be net buyers of gold rather than net sellers (as has been the case for about the last twenty years) has many calling the Indian purchase at $1,045 an ounce the “new floor” for the gold price.

China has already doubled its gold reserves over the last six years, but the Indian move underscored how even the most traditional investors are shifting a portion of their assets into bullion.

So at this juncture, all indicators seem to point to the continued rise in gold prices, at least for the near term.