Several factors are influencing the gold market and stirring debate between the bear and bull camps including the euro-gold trade, China’s stance toward gold reserves, Central Bank buying (and now selling!), and physical demand.
Many bullish analysts point to plenty of support for higher prices coming from safe-haven concerns. It’s these concerns, rather than pure supply/demand fundamentals, that have brought prices 13 percent higher in 2010, which gives many an eternal pessimist reason to warn the gold market may be experiencing a bubble waiting to burst.
A late morning $20 bounce put a smile on every gold bug’s face, and by mid-day the precious metal had shot above $1240 an ounce, hitting a high of $1246.20 late in the day. Prices backed off a bit to close at $1241.30 an ounce on the COMEX.
After hitting an all-time record high, the price of gold edged back down Thursday. Precious metals analysts are blowing off the break as little more than a bit of profit-taking or a short breather before gold prices continue their upward climb on fear and uncertainty in the markets, which has been pushing investors into safe-haven assets.
GFMS Group’s well-respected annual Gold Survey report is out for 2010, but what’s got most in the precious metal markets talking is the comments made by Philip Klapwijk, chairman of precious metals research at GFMS, during an interview with Reuters: “There are pointers to the fact that we are entering the final stages of a bull market.”
Gold bugs are smiling this week, especially after the price of gold surged ahead to a four-month high breaking past $1,150 an ounce Wednesday despite relative dollar strength and the bearish voices heard throughout the market last week.
Many analysts are speculating that the dollar will rebound next week after Friday’s report, curbing gold demand and furthering its rangebound predicament.
Will gold ever be able to decouple from the dollar like it almost seemed to do earlier this year, or has its status as safe haven asset irrevocably shifted to the risk-asset class? Time will tell.
Further affecting precious metals prices of late is the fear paper currencies around the globe may be in peril, making gold as a hard asset much more attractive.
By Kishori Krishnan Exclusive To Gold Investing News Gold was softer on Monday but holding within reach of a seven-week high as inflation and economic fears boosted its appeal as a hedge against uncertainty. Spot gold bid at $928.50 an ounce in the early hours of Monday, compared with $930.70 late in New York on [...]
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