The gold price slipped this morning before reaching another two-month high. Weak eurozone data and violence in Iraq continues to support the gold price, however speculators are no doubt awaiting the US and the West’s next steps in regard to the militant takeover of Northern Iraq.
Last week’s climb in the gold price has boosted investor sentiment, as shown in the SPDR Gold Trust which saw inflows of 2.4 tonnes yesterday, taking total holdings to 785.02 tonnes. Despite last week’s surge in the gold price being the biggest since last September, Bloomberg reports that gold investors remain too shaken from last April’s fall that they are ‘never, ever getting back together with gold.’
SocGen bearish on gold…again
In a similar vein of thought Societe Generale has released a cross-asset report that believes the gold price will continue to decline as the dollar strengthens and US interest rates climb. The French bank believes sentiment in the West will continue to decline and money managers will ‘continue off-loading’ those positions invested in ETFs.
The bank also expresses concern for Chinese demand, ‘with the gold price rallying…gold demand in China specifically seems on the wane again.’ Much of the recent rally has been attributed to short-covering rather than a correction in the gold price.
Combined with the fact that gold is still trading above its long-run [mining] cost and short-run marginal cost,’ the bank forecasts a fall in the gold price to $1,000/oz by end-2016.
Much of the bank’s negative outlook is based on the belief that tapering will continue to the end of the year, with tapering then being put into play.
Germany doesn’t want its gold back
What a surprise but the German government has decided that their gold will stay in the US after all. The budget spokesman for the German Parliament told Bloomberg that ‘The Americans are taking good care of our gold…It is my view that the gold reserves should be stored wherever they might be needed in an emergency.’
This decision is unlikely to reassure critics who still would like there to be an audit of the gold and for there to be easier access to it so as to protect the German economy from blackmail should the European currency union begin to collapse.
Indians ‘bribed’ to buy gold
In India, Bloomberg reports, gold retailers are pulling no punches when it comes to competing for customers’ attention during a lean season in the gold market. According to the news outlet raffle prizes of BMWs and bullion bars are up for grabs to those customers who buy gold. Many of the competitions are available to those in both India and other Gulf countries.
Platinum price down
Platinum continues to extend losses, this morning, as South African strikes appear to be coming to an end. Fears of a tightening in platinum supply shortage over the coming months have been eased as a result. The deal between AMCU and the mining companies is yet to be agreed, however. Recall two weeks ago when mining companies signalled that a deal was about to be reached but the unions soon made ‘unaffordable’ demands.