Gold fell 1.4% last week but rose nearly 4% in the month of October which is traditionally a poor month for gold (unlike the seasonally stronger months of November and December). Gold looks set to make gains this week on growing concerns about the health of the US economic recovery and possible further falls in equity markets internationally.
Gold has in recent years tended to fall in the week of options expiry and then rise the following week. Gold has also tended to come under pressure in the week of US government bond auctions and with the massive bond auction of last week over and options expiry over, gold may again eke out gains this week.
Gold up 4% in October
There is a raft of data in the US this week including Construction Spending, the ISM Index, and pending Home Sales on Monday, Factory Orders on Tuesday, ADP Employment, ISM Services, and a FOMC Rate Decision on Wednesday, Productivity and Initial Jobless Claims on Thursday, and Wholesale Inventories, Consumer Credit, and October’s jobs data on Friday. Gold may also be influenced by meetings at major central banks, including the Federal Reserve and European Central Bank, as well minutes from the past meetings of others.
The G20 finance ministers meeting in Scotland later in the week may be important both from a monetary and fiscal policy point of view. Should the Chinese, Russian, some Europeans and others voice further concerns about the US dollar and US fiscal and monetary policy then the dollar will come under pressure boosting gold. Growing concerns about the dollar may not be the primary issue discussed in public but countries with currencies that have appreciated and are suffering from deflationary pressures are likely to air their concerns behind closed dollars. The crucial issue is the need for fiscal stimulus withdrawal and how well large debtor nations can cope with such withdrawal given worrying recent data. The St. Andrews meeting will also see whether the unity shown by the G20 during the worst of the crisis will continue now that national economic growth rates are diverging markedly and this could see creditor nations particularly in Asia become more assertive in flexing their growing political and economic muscle.
Some of the major gold players will be attending the LBMA Precious Metals Conference also taking place in Edinburgh (yesterday, Monday and Tuesday) and this could see a decline in volumes. The directors of GoldCore will be attending the conference and are available for meetings and press interviews.
Silver is currently trading at $16.50/oz, €11.18/oz and £10.09/oz, no real change on Friday’s trading.
Platinum Group Metals
Platinum is trading at $1,327/oz and rhodium is trading at $1,950/oz. Palladium is currently trading at $324/oz.
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