Increased Gold Investment On Japan’s Horizon?

Draghi’s comments Thursday did some good stuff for those of us in gold investment; the gold price traded as high as $1,678.80 and settled at $1,675 posting a one per cent gain for the day, its biggest one day gain this year. It has now risen 3% after its 4 and a half month low last week.

As expected the ECB had nothing to excite us with; no hints on a rate-cut now or in the near-term and once again Draghi is ‘optimistic’ announcing that conditions in the single-currency union would improve later in the year. Before the gradual recovery at the end of the year, Draghi forecast the Eurozone would remain weak in the year.

As a result of the ECB announcement there was around a 1.5% gain in the euro against the dollar which helped to boost gold. Prior to the announcement gold inched slightly lower as many waited to see the outcome of the meeting.

Platinum shines bright

The real star of Thursday however was the platinum group of metals which saw Chinese export data boost the platinum price to a month-high. Spot platinum rose 2.4 per cent whilst palladium saw its 3rd day of gains, rising 2 per cent to $696.60. The gold-platinum ratio is now at its tightest since last April, falling to below 50.

Abe boosts Japanese gold buying

Overnight Thursday, Japan’s Prime Minister announced a $116 billion stimulus package in an attempt to drag the economy from under its recession rock, as the yen dropped to a 2 and a half year low against the dollar. As a result Japan’s gold market gained some attention as Tokyo gold futures hit a record high of 4,820 yen a gram ($1,699.62/oz).

Further predictions for gold investment

Thursday we also saw a few more gold price predictions for those thinking to buy gold bullion may want to make note of. Barclays Capital expect gold to average $1,778 this year, a fall from its pre-Christmas prediction of $1,1815. According to the bank a ‘lack of conviction has tainted the gold price’ , the yellow metal faces a number of hurdles but there are still ‘a number of macro-catalysts’ which could still push the price significantly higher.

Barclays Capital were feeling more bullish about silver, platinum and palladium which it held its forecasts for – $32.50, $1,690 and $736 respectively. Barclays believes palladium has the strongest support this year and, given the supply deficit, will do well.

Elsewhere, Ira Epstein has said that he sees gold hitting $1,800 this year, but it won’t be an easy ride. He expects it to test mid $1,500s, as it did last year, and sees ‘accumulating on weakness [as a] solid long-term approach.’ Unlike, Barclays Capital however Epstein is nowhere near as bullish on silver, which he believes will have difficulty rallying without a catalyst in 2013.’

Gold hazards

Whilst we discuss the gold price on a fairly blasé basis each week, sometimes it’s worth giving thought to how we even get hold of the stuff in the first place, which often comes at a cost. On Thursday we were reminded of the increasing negative impacts high gold prices can have on those who mine it. Gold mining is worsening the health impact of toxic mercury in small-mining developing nations. The high gold price has encouraged more people, living in poverty, to work in the gold mining sector, regardless of the health risks. The situation is so bad 120 nations will be meeting in Geneva next week to ‘work out an anti-mercury treatment’.

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