The Daily Nugget: Gold Rises On US Jobless Claims Increase

Gold was back on form today after taking a few days off. Jobless claims showed that more Americans are unemployed encouraging speculation that the Fed will continue on with QE.

After hearing jobless claims had soared by 7,000 last week, gold rose by 7.9% from yesterday. This counterbalanced yesterday’s reaction following the positive home sales data.

The gold price action shows that despite strong gold investment demand in Asia and concerns over supply, it is still the US economy that is driving the gold price.

The ‘will they, won’t they?’ is clearly still an issue for traders, as we see the gold price ultimately trading sideways. I suspect they are now looking for their next FOMC fix, which will arrive next week in the form of the latest meeting minutes.

I suspect we will continue to see this level of volatility until the markets receive something almost tangible from the Fed. Until then it is all about speculation in the West and in the Eat they keep their heads down and buy gold bullion.

Bear of the day

Gold bear of the day award goes to ABN Amro who today released a report stating that they expect gold to go as low as $840/oz in 2015. This year the predict $1350/oz. They are, however, bullish about the other precious metals – platinum, palladium and, of course, silver.

The bank cites a ‘quick’ global recovery next year and a ‘over supply’ of the precious metal as the reason for their bearish outlook.

Goldman Sachs also released a forecast today, but don’t worry it wasn’t (quite) as miserable as $840. Goldman’s believes that the year will see an average price of $1,314 as they do not see the FOMC making any sharp reductions in QE levels.

ETF news

It seems every day SPDR gold trust holdings have hit another low ‘not seen since…’, however it isn’t all going downhill for gold ETFs. Today Reuters report that Aisan investors remain ‘faithful’ to their ETF gold holdings.

Whilst in the ETF outflows continue to make headlines, this was not the case in Aisa where ‘a net $33.5 million was pumped into Asian gold and precious metals miners’ funds in the three months to June.’

One commentator believes this confidence in the funds comes from the confidence in gold, something which Western investors are yet to find. Which I don’t think is a mystery to anyone…

Gold smuggling

And so the gold smuggling continues as governments try desperately to clamp down on gold. In South Korea, where a new gold exchange will be launched in order to clamp down on gold activity, officials arrested nine Taiwanese nationals accused of smuggling over 60 kilograms of gold.

Over India, where it seems every month there is another attempt to restrict gold imports, there have been two reports of arrests made over gold smuggling in the last 48 hours. One man was arrested for smuggling 3 kilos, but this was small fry compared to the 124 kilos seized on a plane which had come from Kathmandu to Dhaka yesterday.