The Daily Nugget: Boring Few Days For Gold Investment

Yesterday was a fairly boring day for those in gold investment, as well as silver bullion investment. Gold stumbled down 0.1% to $1,655 whilst silver traded down around 0.1%.

Earlier in the week we reported that Chinese gold imports rose to a seven-month high in November. This morning we learn that just last month alone China’s exports rose 14.1% which will no doubt account for the rising demand to buy gold bullion and other commodities.

Since the beginning of the year gold has dropped back by 0.9%, given the Dollar Index strength and global economic data analysts believe the yellow metal will continue to trade in a narrow range for the short-term.

Holdings in silver-backed exchange traded products rose to an all-time high of 19,043.07 metric tonnes yesterday.

The first three days of this week have been relatively quiet however these next two days should be slightly more interesting thanks to the ECB policy meeting later today and Chinese data releases tomorrow. The ECB are expected to maintain current policy at their meeting today. Confidence indicators suggest the ECB need not reduce interest rates to below 0% – an issue fraught with concerns over the consequences.

As we discussed yesterday Germany can’t carry on with Europe on its shoulders and keeping its own economy going at the same time. Yesterday was proof of this as industrial production numbers rose less than expected thanks to a sharp fall in consumer and energy goods production in November. The small increase of just 0.2% indicates that the Germany economy slipped into contraction in the fourth quarter.

Speaking of Germany, Chancellor Angela Merkel yesterday told Cyprus that they must agree to significant reforms before they qualify for a rescue package. No special conditions would be allowed for the country as "we have common rules in Europe" argued the Chancellor, those having worked out so well after all.

Also today the Bank of England’s MPC will meet. They are expected to resist calls to increase QE, as the majority are said not to believe there is a particularly strong case given signs of increased inflation and that the FLS may be starting to work its way through the economy. Here at The Real Asset Company we agree that there should be no change, inflation is set to increase given the recent drop in the pound.

Good news here in the City of London, the FTSE 100 rose to a four-year high yesterday thanks to a bullish view on the global economy and the weaker pound placing UK companies with foreign operations on a more attractive perch.

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