As expected the gold price has pulled back a little, for some this is because speculators believe the Fed will hold its tapering programme, however for others it is due to a slow-down in physical purchases. The gold price remains near its three-and-a-half month high, but is most likely to have dropped due to some profit taking.
Overnight some Asian investors began to sell when the price hit $1,332/oz, silver also fell following this but remains near the three-and-a-half month high of $21.96/oz. Premiums on the Shanghai Gold Exchange on 99.99 percent purity gold fell from $9 to $4 overnight. We don’t expect this correction to be too deep as both gold and silver appear to have good momentum.
The two most accurate forecasters tracked by Bloomberg remain bearish, despite the rally in prices since the beginning of the year. The most accurate forecaster, Robin Bhar, head of metals research at Societe Generale SA, expects a fourth-quarter average of $1,050/oz and believes the recent climb is a ‘corrective move’. The second most accurate forecaster, Justin Smirk, senior economist in Sydney at Westpac Banking Corp, believes $1,020 will be the fourth quarter average.
In terms of this week gold may receive a boost from a series of US economic data releases, namely housing and inflation. Should both come in below par then the dollar will no doubt suffer, giving a boost to the gold and silver price.
This morning the World Gold Council (WGC) have released their final report on 2013 gold demand. There is little in there that you are unlikely to be aware of already but the main points that are being reported in the media are, as follows:
- Global demand declined to 3,756.1 metric tons in 2013, from 4,415.8 tons in 2012. A 15% fall.
- Investors sold as much in gold ETFs as they had bought in the previous three years.
- Global jewelry demand rose 5.8 % to 553.8 tons in the latest quarter, with the full-year total climbing to 2,209.5 tons.
- Bar and coin buying fell 5.5 % in the three months through December, narrowing last year’s total to a record 1,654.1 tons.
- Total consumer purchases climbed my 21% last year.
- China (according to WGC figures) overtook India, with demand increasing 32 % to an all-time high of 1,065.8 tonnes. As we have mentioned many times, this figure excludes some key data.
- Mine output rose 7.7 % to 802.7 tons in the fourth quarter and climbed 5.4 % to 3,018.6 tons for the full year.
- Scrap supply was down 12 % at 339.4 tons in the quarter and 14 % lower at 1,371.4 tons for the whole year.
Look out for our commentary on this, later on today.