By From Adrian Ash
As Professional Traders Target $1500 by April
THE PRICE OF GOLD rose further for Dollar investors in Asian and London trade on Thursday, but edged back from yesterday’s new all-time highs vs. the Euro and Sterling as the US currency slipped on the forex market.
Dollar gold prices touched a 3-week high just shy of all-time records at $1415 per ounce, and the silver price reached new 30-year highs at $30.89.
German and UK government bonds meantime ticked higher as European stock markets extended yesterday’s drop.
Commodity markets were mixed, with crude oil holding near 28-month highs, palm oil trading at 15-year highs, and copper adding to Wednesday’s new record highs near $9,500 per tonne – some 27% higher for 2010.
The US Dollar meantime set new multi-year lows against a raft of currencies including the Australian Dollar, South African Rand and Chinese Yuan.
“It is seemingly impossible at this time to fight the Fed’s printing presses,” writes Fred Hickey in his widely followed and much respected High Tech Strategist letter, noting the resilience of US stock markets thanks to $600 billion of new quantitative easing – planned to run until June 2011 –feeding into asset prices rather than the economy.
“The Fed is printing money at a prodigious pace [and so] little by little, gold is entering the consciousness of the American public.”
“Market players are [also] continuing to position themselves for further gains in price through 2011,” writes GFMS Analytics’ Rhona O’Connell for MineWeb.
Studying the structure of open interest in US Comex gold futures and options, it “points to more volatility and the risk…is very much to the upside,” says O’Connell, concluding that professional traders are looking for a gold price of $1500 or even $1600 by the start of April.
Meantime in India – the world’s No.1 gold consumer market – “If one looks back, prices have not posted a negative annual return since the year 2000,” says M.Jhaverimal, a gold retailer in Mumbai, also quoted at MineWeb.
“A sizeable chunk of the Indian population may still be living below the poverty line, but when it comes to buying gold, we are right up there in the front,” says bullion trader Ashish Shah.
But “China is the biggest bullish factor in the gold market,” reckons Yuichi Ikemizu at Standard Bank in Tokyo, pointing to the fast-growing demand from the world’s No.2 consumer market.
New data from HSBC and Markit Economics today showed Chinese manufacturing activity slowing in Nov. for the first time in 5 months, because “Inflation rather than growth still remains as the top policy concern,” according to HSBC’s Hong Kong-based economist Qu Hongbin.
Last weekend’s interest-rate hike by the People’s Bank of China affected bank loans, not deposit rates – still standing at just 2.25% despite official consumer price inflation of 5.5% per year.
“There’s no ‘safe’ currency at the moment, so investors choose to park their money in gold,” says Beijing Zhong Jing trader Liu Yangyi, speaking to Bloomberg.
“Gold will continue to do well as inflationary pressures build on rising commodity prices.”
Adrian Ash
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Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2010
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