Gold Weekly Fundamental Analysis January 27 – 31, 2014 Forecast Gold surprised investors turning upwards this week to end at 1265.40 against expectations for a decline to the 1220 level. Many Japanese investors are turning from the yen and buying gold as a hedge against inflation and wealth preservation as the Japanese economy turns towards inflation. Gold is on track to record a fifth straight weekly gain for the first time since September 2012. But investors are still wary of a market that took its biggest tumble in more than 30 years in 2013. The world’s largest gold-backed ETF, New York’s SPDR Gold Shares, said its holdings declined by 5.4 tonnes on Thursday, bringing its outflow for the week to 6.6 tonnes. It logged its first weekly inflow since early November last week. Chinese demand eased, with premiums on the Shanghai Gold Exchange dropping to $10 an ounce from $12 the previous day. China in 2013 took over from India as the world’s leading consumer of gold jewelry, data from metals consultancy Thomson Reuters GFMS showed. Gold premiums in India, the second-biggest buyer, fell more than 30 percent yesterday from earlier this week on speculation over a possible easing of restrictions on bullion imports. This quarter, gold prices could rise five per cent to $1,330, owing to strong physical buying and robust fabrication demand, a Thomson Reuters GFMS study has said. “It is possible for gold to touch $1,330 before the current quarter is over. The gold market has not regained the sparkle of 2008-late 2011, and is not expected to do so this year, too,” the study said. While private investors showed a voracious appetite for gold in the wake of a sharp drop in prices, professional investors were absent from active buying, a trend expected to persist through this year. But a short-covering rally in the first quarter of this year isn’t being ruled out and this could contribute to the recent stabilization at a little more than $1,185 Tapering of the bond-buying programme in the US by the Federal Reserve didn’t have a major impact on the gold market, as prices fell in the second quarter. The result was while exchange-traded fund (ETF) investors sold 880 tonnes through 2013, bar hoarding in East Asia, the Indian sub-continent and West Asia stood at 1,066 tons. It is expected tapering in the US will continue till the end of this year and by then, some interest rate guidance is expected to emerge. Improving economic fundamentals are expected to continue to improve investor appetite for risk and prevent hefty gold investment. Historical: From 2011 to present Highest: 1911.60 on Sep 06, 2011 Average: 1633.45 over this period Lowest: 1180.35 on Jun 28, 2013
Posted on: Sun, 26 Jan 2014 20:53:56 +0000
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