Gold Prices Rally, Push Higher in Face of "Bearish Sentiment" from Major Analysts
Tuesday, 7/08/2014 13:40
GOLD PRICES rallied Tuesday morning in London, hitting their highest level since Thursday at $1324 per ounce as European stock markets fell for a 2nd day.
Trading $10 per ounce below last week's 3-month highs, gold prices also ticked higher against other major currencies as the Dollar rallied on the FX market.
"Gold has had a strong performance so far this year," says analysts at Dutch bank ABN Amro, "but it is unlikely that this will continue."
Forecasting a rise in the US Dollar, ABN predicts "another negative year for
gold investment demand", with bar and coin demand falling as ETF trust funds return to net sales.
"Expectations of an early rate hike by the Fed is continuing to weigh on investors," reckon Australian bank ANZ's commodities team.
"The next pivotal event will fall on Wednesday," says US broker INTL FCStone, "with the release of the Fed minutes" from the US central bank's mid-June meeting.
Gold prices jumped over 4% in the 24 hours after that Federal Reserve meeting, where chairwoman Janet Yellen was more "dovish" on possible rate hikes than analysts expected.
Ten-year US Treasury bonds today ticked higher in price, nudging the yield offered to new buyers down to 2.60% – lower than when gold prices hit 3-year lows this time in 2013.
Brent crude meantime slipped Tuesday back below $110 per barrel, "erasing the Iraqi rally" spurred according to Bloomberg by violent Sunni militants – now calling themselves the Islamic State – seizing oil fields in the north of the country a month ago.
Silver tracked gold prices higher, touching last Friday's 15-week closing high at $21.19 per ounce.
"Gold is quietly pushing higher without sentiment turning that bullish yet," says the latest monthly report from London market maker Scotia Mocatta's New York team.
"Some large financial institutions are still calling for lower gold prices," Scotia goes on. "So it will be interesting to see whether they change their call if ETF investors get more bullish."
The largest exchange-traded gold fund, the SPDR Gold Trust, yesterday added another 1.8 tonnes to the metal backing its trust-fund shares.
Raising the trust's total holdings near 3-month highs at 798 tonnes, Monday's inflow took the last 5 trading days' addition to the largest 1-week growth in GLD gold since October 2012 – just as the fund reached its all-time peak at 1350 tonnes.
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