28 Jun. 2012
Category: General
Gold prices are on their way up as uncertainty and growing fear send investors to the safe haven. At the heart of the issue today is the consensus feeling that the European Union Summit will have been nothing more than a futile undertaking and that no positive decision will have been made at its conclusion. Gold has lost a bit of its appeal as a safe haven in recent months, moving more like a typical commodity, and many investors turning to instead to the U.S. Dollar or Japanese Yen. Nonetheless, there is growing expectation among market participants that the central banks will be compelled to act swiftly to stem the rapid-fire spread of economic disaster.
While the Federal Reserve didn’t live up to QE3 expectations, market players are increasingly certain that, given the Eurozone crisis, which likely won’t see any progress toward resolution, the European Central Bank will be compelled to provide some accommodation which will relieve some funding pressures.
Gold was recently trading at $1,575.59, up $1.19 per ounce, and it briefly struck $1,581 during yesterday’s session, but is still likely to record a 5+% drop for the second quarter. Last year, gold was trading at a record $1,920 an ounce, but has been hard-pressed this year to stray far from the 4-month low of $1,527 which was hit last month.
On OpenBook, sentiment among gold traders is being driven by bulls who outnumber bears by a 3 to 2 ratio. Australian guru MIB1984, who has 868 copiers and 2568 followers, has given gold the majority allocation in his portfolio; over the past quarter gold had a 78.6% allocation which returned 17%, and over the past month the guru lowered the allocation to 72% but saw a rise in the gains to 20.6%. He has several short positions open; one showing a 13.13% gain and another at near breakeven. The guru’s stats are all in green except for the past week when a silver trade hit its SL. For the last month, the guru’s profits were at 84%, and for the quarter at 276.4%, and beyond that the guru’s profits exceed 300%.
One precious metals analyst from Deutsche Bank does not see any catalyst which might provide a significant rebound in the near term, but says that steady gold buying by the worlds’ central banks will at least keep prices from softening too much.
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