The Next Leg of Gold’s Bull Run
MarketWatch
Has the great bull run in gold run its course?
On the surface it looks as if it might have. After running up close to $2,000 an ounce during the market panic of last autumn, it has slipped below $1,700. And it shows little sign of reclaiming its highs.
But here’s one reason why it could have a lot further to go.
The big, developed world central banks will start buying again. And if they do, it would put real rocket fuel into the price of the precious metal.
In his budget last week, British Chancellor George Osborne caused a small flurry in the markets with a line that suggested the Bank of England might start stockpiling gold. The U.K. Treasury quickly denied it, saying that he had just been talking about reserves in general, rather than gold specifically.
But in fact, Osborne was onto something.
The developed world central banks should all be increasing their reserves dramatically. The best way would be by refilling their vaults with the precious metal.
In his speech, Osborne said that he planned to increase Britain’s reserves, something most developed countries have not worried about for the best part of three decades. They are certainly in a sorry state. For a major developed economy, the U.K.’s reserves are laughably tiny.
Under the previous prime minister, Gordon Brown, the country sold off a lot of its gold right at the bottom of the market. Its total reserves now amount to just $46 billion. That is up a bit from the $34 billion they stood at when the new government took office, mainly because of the increase in the value of its gold holdings and also the extra deposits committed to the International Monetary Fund.
But the U.K.’s hoard of gold and foreign currency is dwarfed by China’s reserves, which currently stand at a towering $3.18 trillion, as well as by Japan with $1.2 trillion, and by Saudi Arabia with $500 billion.
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Gold Edges Higher as Euro Climbs After EU Treaty
Proactive Investors
Gold prices edged higher today as traders responded to the deal reached by 23 of 27 EU members at today’s summit in Brussels with cautious optimism. The euro was on the rise this afternoon, while the safe-haven US dollar fell, lifting demand for gold, which is seen as an alternative asset to the greenback.
The deal calls for sanctions against countries that fail to keep its budget deficit within three percent of their GDP, while capping the size of Europe’s bailout funds at €500 billion.
In addition, EU policymakers have agreed to bring the launch date of the new permanent bailout fund, the European Stability Mechanism, forward by one year to July 2012.
The four EU members that refused to join the new treaty included the UK. British Prime Minister David Cameron pulled out of negotiations and used his veto power to block the proposed changes to the EU treaty as the deal failed to protect British interests.
The US dollar received some support from today’s US consumer confidence data that was released later in the afternoon.
The University of Michigan said its consumer sentiment index surged from 64.1 in November to 67.7 this month, hitting six month highs. The data topped expectations as analysts polled by Bloomberg News projected an increase to 65.8.
Gold traded at US$1,709/oz, up US$4 from Thursday’s close. Other precious metals were headed in the same direction as silver rallied 21 cents to US$31.87 and platinum added US$7 to reach US$1,500/oz.
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Gold Rises 1%, Trades in Record Territory
Futures are up more than 1% year-to-date and poised for a gain of around 1.9% from Feb. 28.
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Gold Heads for Longest Run of Quarterly Gains in 3 Decades on Libya, Debt
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Gold Rises on Political Tenesions and Debt Woes
International Business Times
Precious-Gold rebounded today as the growing tensions between the two Koreas and debt concerns in the euro zone increased the appeal of the commodity as a safe haven.
Spot gold is trading at $1366.69 an ounce, recording a high of $1367.34 and a low of $1353.12.
The shiny metal took advantage of the escalations between North and South Korea after they exchanged fire last week. South Korea refused talks and said it started maneuvers while North Korea mentioned it will have "merciless" response to any attack.
On the other hand, Ireland will receive 85 billion euros to restructure its banking system and lower its huge debt. Details showed that the aid package would be financed through 45 billion euros from European governments, 22.5 billion euros from the IMF and 17.5 billion euros from Ireland's cash reserves and national pension fund. In addition, UK will provide its neighbor with 3.8 billion euros.
Yet, the news may not lower tensions in markets that pushed the euro to two-month low versus the dollar as other highly indebted nations, more specifically Portugal and Spain, may ask for a rescue package soon.
The news pushed the euro to a low of 1.3179 against the greenback then it rebounded to 10.3280 where it is currently trading.
The US dollar, on the other hand, is currently traded at 80.14 where it is finding support at that level while the highest point was recorded at 80.64 and lowest was at 80.04, according to the dollar index.
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