Gold Up on Safe-Haven Buying, Dollar Weakness
MarketWatch
Gold futures inched higher Friday, leaving behind early-session losses as a lower dollar and safe-haven buying ahead of the weekend supported prices.
The early price weakness was met with buying interest that quickly pushed prices higher, a good sign for gold’s short-term gain prospects, analysts said.
Gold for February delivery rose $6, or 0.4%, to $1,732.70 an ounce on the Comex division of the New York Mercantile Exchange after tapping a low of $1,714.20 earlier.
A close in the black would be gold’s third straight session of gains.
Gold surged more than 3.6% in the past two days, and on Thursday settled at its highest in seven weeks.
The metal has enjoyed strong recent gains spurred by the Federal Reserve’s projection of ultra-low interest rates through 2014.
Gold prices have risen nearly 10% so far this month.
“Gold looks great in the charts and a lot of people are taking it as a sign to buy gold,” said Adam Klopfenstein, a market strategist with Archer Financial Services in Chicago.
Ahead of the weekend and potential for headlines out of Greece and the euro zone, some are also adding gold to their portfolio as a safe haven, he added. A lower dollar also helped push prices higher, Klopfenstein said.
The Wednesday Fed decision “awakened the positive gold sentiment” that had been underneath the surface but cloaked in caution after the selloff in fourth quarter, said Jeffrey Wright, a senior research analyst with Global Hunter Securities.
“Inflation is in the market; (it is ) just being under-reported in my opinion,” he said. In addition, the “miss” on fourth-quarter gross domestic product will give the Fed an “additional cover” to continue its “easing” stance and will also contribute to gold going higher, he added in emailed comments.
Earlier Friday, investors parsed out news U.S. GDP expanded 2.8% in the fourth quarter, compared to expectations of a rise around 3%.
Other metals more linked to industrial uses, and therefore more sensitive to the GDP news, felt the pressure on Friday, but silver turned higher.
read more on this article here
Gold Rises for Third Day After Soft U.S. GDP Data
Reuters
Gold prices rose on Friday, on track for their biggest three-day rally since late October, after a report showing disappointing U.S. economic growth boosted the metal's safe-haven appeal.
Bullion rose above $1,730 an ounce for the first time in seven weeks after data showed the U.S. economy grew less than expected in the fourth quarter. Gold's gains extended a rally ignited on Wednesday when the Federal Reserve said it would likely keep interest rates near zero until at least late 2014.
Gold also got a boost from reports that the world's biggest hedge fund, Bridgewater Associates, was bullish on the precious metal as a hedge against inflation as governments print more money to reduce debt.
"With the softer-than-expected GDP reading, it means that at a minimum we are going to have a highly accommodative monetary posture," said Mark Luschini, chief investment strategist of Janney Montgomery Scott, a broker-dealer with about $54 billion in assets under management.
"That should be supportive of the higher gold price, as it plays into the probability that QE3 may be in the offing," Luschini said.
Spot gold was up 0.7 percent at $1,731.59 an ounce by 12:32 p.m. EST (1732 GMT). It is up around 4.5 percent this week alone, its biggest one-week gain since the last week of October.
U.S. gold futures for February delivery were up $4.80 at $1,731.50 an ounce at a strong volume.
Technical buying also fueled gains. Earlier in the week, gold broke above a key Fibonacci retracement level and the 100-day moving average. Gold rose above its 200-day MA last week.
Gold is on track to rise more than 10 percent this month, its biggest monthly gain since August 2011.
Explaining gold's big gains this week, analysts pointed to the Federal Reserve's announcement that it would keep rates low into 2014.
"The Fed's announcement that it would keep its rates exceptionally low until 2014 was ... clearly not fully priced by the market," said BNP Paribas analyst Anne-Laure Tremblay.
"Real interest rates are likely to stay negative in the U.S. in the next two years, which will be supportive of the gold price," Tremblay said.
Low interest rates benefit zero-yielding gold, and minimal borrowing costs also tend to fuel a gradual increase in commodity prices, supporting the metal's traditional role as a hedge against inflation.
Also helping gold was a weaker dollar versus the euro and stronger crude oil prices.
FED MOVE NEW CATALYST?
The debt crisis was a major driver of higher gold prices last year, as investors bought the metal as insurance against a worsening outlook for the euro zone. However, its rally stalled in late 2011 as the metal appeared to lose its appeal as a safe haven.
UBS analysts said the market attitude toward gold has largely been cautiously optimistic after the metal fell 10 percent and briefly entered a bear market in the fourth quarter.
"A fresh catalyst was needed and we think the FOMC outcome on Wednesday fit the bill. More accommodative policy is a very good foundation for gold to build on the next move higher," the Swiss Bank said in a note.
Among other precious metals, silver was up 0.8 percent at $33.68 an ounce.
Gold Bulls Ascendant on Biggest Rally Since ’80
Bloomberg
Gold traders are bullish for a fourth consecutive week, betting that theFederal Reserve’s pledge to keep interest rates low until late 2014 will extend the metal’s best start to a year in more than three decades.
Nine of 15 surveyed by Bloomberg expect prices to gain next week. The value of gold held in exchange-traded products jumped $3.9 billion on Jan. 25, the most since October, as the central bank laid the groundwork for a possible third round of asset purchases, data compiled by Bloomberg show. Lower interest rates increase the appeal of bullion because it generally earns investors returns only through price gains.
Bullion rose 2.7 percent, the most in three months, after Chairman Ben S. Bernanke said he’s considering additional bond purchases to boost growth. The Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 to June 2011, during which gold appreciated about 70 percent. Investors are now buying American Eagle gold coins from the U.S. Mint at the fastest pace since July 2010, data on its website show.
“The trigger offered by the Fed definitely helped,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “The opportunity costs of holding gold will remain low in the future and this should boost the attractiveness of gold. We don’t see an end to the long-term uptrend in gold prices.”
January Rally
Gold rose 9.9 percent to $1,720.65 an ounce this month by yesterday, the best start to a year since 1980 and rebounding from the first quarterly decline in three years. Bullion is beating the 3.3 percent advance in the Standard & Poor’s GSCI Total Return Index of 24 commodities and the 5.8 percent gain in the MSCI All-Country World Index of equities. Treasuries lost 0.2 percent, a Bank of America Corp. index shows.
The metal reached a record $1,921.15 in September and slid to within 1 percentage point of a bear market on Dec. 29, taking it below its 200-day moving average for the first time since January 2009. Gold closed back above the 200-day moving average on Jan. 11 and the 100-day moving average on Jan. 25. That’s a sign for some investors who study charts of trading patterns and prices to predict trends that the rally has further to go.
The Fed pledged that it is “prepared to provide further monetary accommodation” if unemployment remains higher than it would like while inflation falls below a newly-established target. The International Monetary Fund said a day earlier that the world economy will expand 3.3 percent this year, down from a 4 percent estimate in September. The World Bank cut its growth forecast last week by the most in three years.
Monetary Easing
A third, fourth and fifth round of easing “lie ahead,” Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., wrote in a Jan. 25 Twitter post. The European Central Bank kept interest rates at a record low this month as the region contends with a spreading debt crisis.
The U.S. Mint sold 114,500 ounces of American Eagle gold coins so far this month, its website shows. Full-month sales would reach 143,125 ounces at that pace, the most since July 2010. The 2,359.638 metric tons of gold held in ETPs backed by the metal is within 1.5 percent of the all-time high set last month and exceeds the reserves of all but four central banks.
read more on this article here
Gold Climbs as Greece hopes lift Euro
Proactive Investors
Gold was in demand this afternoon as optimism that Greece is nearing a deal with its private creditors lifted the euro against the US Dollar, which is seen as an alternative investment to the yellow metal.
Speaking at the World Economic Forum in Davos, European Economic and Monetary Affairs Commissioner Olli Rehn said the sides could come to an agreement before the end of the month.
Rehn added that the next three days will be crucial for Europe’s future for the next three years.
The American currency clawed back some of its early losses this afternoon when downbeat US GDP data reduced demand for riskier stocks, prompting investors to pour money into the safe haven greenback.
The Commerce Department revealed that the US economy expanded at a rate f 2.8 percent in the final quarter of 2011, while expectations were for GDP growth of up to 3.5 percent.
In addition to the decline in the US dollar, oil prices rose sharply today, boosting gold’s appeal as an inflation hedge.
Crude futures rose ahead of Sunday’s vote in the Iranian parliament to decide on halting exports to Europe in response to the oil embargo imposed by the EU on Monday.
Gold traded at US$1,729/oz, up US$9 from Thursday’s close. Other precious metals were headed in the same direction withsilver rallying 32 cents to US$33.79/oz and platinum tacking on US$6 to US$1,611/oz.
Hedge Fund Guru Sees Gold Price Soaring
Barrons
In the current uncertain environment, one hedge fund guru is in no doubt where investors should put their money – gold.
The fund manager, who wishes to remain anonymous, was unequivocal in his belief and was bullish on the longer-term outlook for the value of the precious metal: “Thousands of dollars per ounce,” he says. “Thousands.”
By the end of 2012, he sees the price of gold at between $2,000 and $3,000 per ounce. Even the bottom end of that range would represent a handsome gain. On the New York Mercantile Exchange Thursday, gold was trading at $1,726.10 per ounce.
“Gold is at the intersection of money trends,” says the hedge fund boss. “The only non-fake money is gold.”
The investor says there are lots of ways to get low-risk exposure to gold if there is a sustained loss of confidence.
read more on this article here
Gold Soars to 7-Week High on Post-Fed Rally
MarketWatch
Gold prices climbed Thursday to levels last seen in early December, fueled by fears of inflation and of a weaker dollar after the Federal Reserve pledged to hold U.S. interest rates near zero until the end of 2014.
Gold for February delivery added $26.60, or 1.6%, to end at $1,726.70 an ounce on the Comex division of the New York Mercantile Exchange. That was gold’s highest settlement since Dec. 7.
“A lot of people had thrown the towel on gold and you see it turn like this with a wicked vengeance,” said Matt Zeman, head trader and strategist at Kingsview Financial.
The Fed’s decision Wednesday might well be a game changer for the metal, which ended December at some of its lowest levels for the year and was expected to be subdued for most of 2012.
It “fuels more inflation fears down the road, not to mention the dollar is quite likely to suffer from this,” Zeman added.
Gold earlier traded as high as $1,731.50 an ounce. Futures soared by more than $35 on Wednesday to break the $1,700 barrier on the heels of the Fed’s decision.
The central bank’s new commitment extends its previous statement that economic conditions were likely to be such to keep rates in the historic low range of zero to 0.25% until at least mid-2013.
And the Fed appeared to leave the door open for a further round of quantitative easing if the economic recovery stalls.
The Fed’s move was also credited with boosting oil and other commodities, lifting equities and undercutting the dollar.
“Although the Fed’s decision bolstered commodities prices across the board, the impact on precious-metals prices has been the most apparent,” wrote analysts at KBC Bank in Brussels.
Gold Hits 6-1/2 Week High as Fed News Lifts Markets
Reuters
Gold rose more than 1 percent to a 6-1/2-week high on Thursday as stock markets, commodities and the euro all rallied after the U.S. Federal Reserve extended by 18 months its plan to keep interest rates historically low and hinted at further economic stimulus.
The day after the Fed's announcement, spot gold jumped to its biggest one-day rise in three months, then pulled back from session highs
Fed policymakers said they probably would keep key U.S. interest rate targets near zero until at least 2014. Fed Chairman Ben Bernanke said the central bank was ready to offer additional economic stimulus.
The news cheered gold investors, who have long feared that the precious metal's rally would be stressed by a U.S. rate hike, which would lift both the dollar and the opportunity cost of holding non-interest bearing bullion.
"At the moment everything points to even higher prices, given the strong risk appetite, the better mood among market players, the strong equity markets and the weak dollar," said Commerzbank analyst Daniel Briesemann.
He noted the Fed's explicit signals that the option for more government bond purchases, or quantitative easing, is still on the table and that it no longer sees inflation as a major problem. These, he said, are "definitely very good for gold".
But he added gold might be vulnerable to profit-taking after a strong rally this month lifted prices by 10 percent.
Spot gold jumped 1.11 percent to a high at $1,729.76 an ounce, but had pulled off that 6-1/2-week peak in a quick round of profit taking by 1:17 p.m. EST (1817 GMT). It was last at $1,726.10, a 0.62 percent increase.
U.S. gold futures for February delivery held onto 1.50 percent gains at $1,724.90, up $24.80 per ounce.
Meanwhile, the euro surged to a five-week high against the dollar, further boosting dollar-denominated gold in overseas markets, after U.S. jobs and manufacturing data fed risk appetite with their suggestions of a strengthening U.S. economy. <USD/>
"The strong rally in gold changed what, prior to the (Fed's) announcement, had been a test of gold's resolve," said Saxo Bank senior manager Ole Hansen.
"The Fed statement changed all that and from thinking that the gold rally potentially only had one year left to run, it could now continue for longer," he said.
GOLD EXPECTED TO RISE IN 2012
A poll of precious metals price forecasters carried out by Reuters in January showed most expect gold to continue its bull run for a 12th year in 2012 as interest rates stay low and central banks continue buying.
The survey of 45 analysts predicted an average spot gold price of $1,765 an ounce in 2012, 14 percent higher than last year's average of $1,544. However, the rate of its rise is likely to slow, they said. <PREC/POLL>
"Coupled with continued central bank appetite for gold, the broader macro backdrop remains conducive for gold price gains, given negative real interest rates, concerns over longer-term inflationary pressures and uncertainty surrounding the financial markets and economic outlook," Barclays Capital analyst Suki Cooper said.
Silver was up 1.1 percent at $33.65 an ounce, having tracked gains in gold up to its highest in nearly eight weeks at $33.78 an ounce.
Platinum group metals also pulled off session highs. Spot platinum was up 1.76 percent at $1,606.49 an ounce, while spot palladium edged down to $689.72 an ounce from $690.97 previously.
Miner Lonmin (LMI.L), the world's third-largest platinum producer, posted a rise in first-quarter output despite the impact of safety stoppages, which it warned could hit both sales and costs if current trends persist.
read more on this article here
Has Bernanke Become A Gold Bug’s Best Friend?
Zero Hedge
Below we present the indexed return of ES (or stocks) and of gold over the past 24 hours since the Bernanke announcement of virtually infinite ZIRP, and the latent threat of QE3 any time the Russell 2000 has a downtick. It is unnecessary to point out just when Bernanke made it all too clear that the Fed has nothing left up its sleeve, expect to directly compete with the ECB over "whose (balance sheet) is bigger," as it is quite obvious. What is not so obvious, is that for all intents and purposes, Bernanke may have unwillingly, become a gold bug's best friend, as gold (and implicitly silver) has benefited substantially more that general risk. Much more. So for the sake of all gold bugs out there, could the Fed perhaps add a few more FOMC statements and press conferences? At this rate gold should be at well over $2000 by the June 20 FOMC meeting.
And yet it is not smooth sailing: the time has come to watch out again for potential CME margin hikes (or rumors thereof) in gold at any given moment. After all, any increase in the price of protection against central planning stupidity is "irrational" and must be promptly punished by the keepers of the trillions in "stable derivative markets", who are too busy to police the MF Globals of the world and instead have a mandate of killing any PM price breakout.
read more on this article here
Fed: Benchmark Rate Will Stay Low Until Late 2014
Bloomberg
Federal Reserve officials said their benchmark interest rate will stay low until at least late 2014 and anticipate that unemployment will remain high and inflation “subdued.”
“The Committee expects to maintain a highly accommodative stance for monetary policy,” the Federal Open Market Committee said in a statement released in Washington today. “Economic conditions -- including low rates of resource utilization and a subdued outlook for inflation over the medium run -- are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”
The Fed extended its previous pledge to keep rates low at least until the middle of 2013 as more than two years of economic growth have failed to push unemployment below 8.5 percent. Fed officials in a separate statement today lowered their forecasts for economic growth and inflation this year and in 2013.
“What they’re doing is setting the table for some sort of additional monetary easing,” said Scott Minerd, chief investment officer in Santa Monica, California for Guggenheim Partners LLC. “The changes in the statement from last month de- emphasize growth.”
Stocks rose and Treasuries extended gains. The Standard & Poor’s 500 Index climbed 0.4 percent to 1,320.24 at 2:40 p.m. in New York. The yield on the current five-year note fell nine basis points to 0.80 percent after touching the record low of 0.76 percent.
‘On the Table’
Fed Chairman Ben S. Bernanke, speaking at a news conference after the statements, said that the option of further large- scale bond purchases is still “on the table.”
“If inflation is going to remain below target for an extended period and employment progress’’ is very slow, then “there is a case’’ for additional monetary stimulus, he said.
The Fed lowered its forecast for growth this year to 2.2 percent to 2.7 percent, down from a projection of 2.5 percent to 2.9 percent in November. It predicted the economy next year will expand between 2.8 percent to 3.2 percent, down from a previous forecast of 3.0 percent to 3.5 percent.
In a separate statement of its long-range goals and strategy, the FOMC specified a 2 percent goal for long-term inflation, as measured by the annual change in the price index for personal consumption expenditures.
‘Firmly Anchored’
“Communicating this inflation goal clearly to the public helps keep longer-term inflation expectations firmly anchored, thereby fostering price stability,” the panel said in a statement. It also enhances “the committee’s ability to promote maximum employment in the face of significant economic disturbances.”
Policy makers declined to specify a goal for employment, saying that it “is largely determined by non-monetary factors.” The committee’s longer-run forecast for the jobless rate is 5.2 percent to 6 percent.
The Fed said it would continue to extend the average maturity of its $2.6 trillion securities portfolio, a move dubbed “Operation Twist.” The Fed also maintained its policy of reinvesting maturing housing debt into agency mortgage-backed securities.
“The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually,” the statement said. “The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee’s dual mandate.”
read more on this article here
Gold is Safest Bet Goldman Sachs Forecasts
The Vancouver Sun
Gold provided the best returns of all commodities in the past five years when adjusted for volatility, and Goldman Sachs Group Inc. says the rally will continue as options traders signal no change in the metal’s relatively low risk.
The Bloomberg, riskless return ranking shows the Standard & Poor’s GSCI Gold Total Return Index produced a 6.5 per cent risk- adjusted return in the five years ended yesterday, the highest among 24 commodities tracked by S&P, data compiled by Bloomberg show. Silver, the next-best performer, yielded a risk-adjusted gain of 3.1 per cent, while a total-return index for all raw materials slipped 0.2 per cent.
Bullion, which has seen 11 years of gains as investors sought a haven amid two bear markets in stocks and a sovereign debt crisis, also posted the safest return in the past 12 months, even as it fell from a record high to a five-month low in the second half of last year and gold investors led by John Paulson suffered losses. Goldman Sachs forecasts gold will reach a record this year, and a gauge of future price swings is near a five-month low.
“Economic problems increased globally, and gold emerged as a safe-haven investment,” Walter ‘Bucky’ Hellwig, who helps manage $17 US billion of assets at BB&T Wealth Management in Birmingham, Alabama. “Monetary easing by China and quantitative easing in Europe and the U.S. will help it remain a store of value.”
The risk-adjusted return is calculated by dividing total return by volatility, or the degree of daily price-swing variation, giving a measure of income per unit of risk. The returns are not annualized.
Longest Rally
A higher volatility means the price of an asset can swing dramatically in a short period of time, increasing the potential for unexpected losses compared with a security whose price moves at a steady rate.
Gold’s longest rally since at least 1920 in London has attracted investors worldwide seeking protection from some of the most violent market swings in stock markets on record. The Dow Jones Industrial Average posted four consecutive days of 400-point swings last year, the longest streak since data began in 1896. The S&P 500’s average daily price move since its 2011 high in April was 1.8 percentage points, compared with an average of 1.1 percentage points in the five years before Lehman Brothers Holdings Inc. collapsed in September 2008.
Goldman’s Forecast
The risks that spurred market volatility last year will keep swaying asset prices and the global economy, Nouriel Roubini, the economist who predicted the 2008 financial crisis, said in a talk at Bloomberg’s headquarters in New York on Jan. 19. Rising commodity prices, uncertainty in the Middle East, the spreading European debt crisis, increased frequency of “extreme weather events” and U.S. fiscal issues are “persistent” problems, he said.
That’s good news for havens such as gold. Goldman Sachs said in a Jan. 13 report that futures will advance to $1,940 US an ounce in 12 months. Morgan Stanley forecasts the metal will climb to a record average $2,175 US in 2013, analysts Peter Richardson and Joel Crane said in a Jan. 17 report. Futures for February delivery slid 0.6 per cent to $1,654.90 US at 8:49 a.m. today on the Comex in New York.
Read more on this article here