Daily Market Update

Gold Analysts Bearish This Week – Most Bearish Since 2009

Today’s AM fix was USD 1,322.00, EUR 960.34 and GBP 801.94 per ounce.
Friday’s AM fix was USD 1,338.50, EUR 970.21 and GBP 810.57 per ounce.           

Gold rose $5.90 or 0.44% Friday to $1,332.90/oz. Silver remained unchanged at $20.29/oz. Gold and silver were both down for the week at 3.48% and 5.23% respectively.


Gold in U.S. Dollars, 1 Year – (Bloomberg)

Gold fell a further 0.7% today after last week it posted its biggest weekly drop since November – down 3%.

Gold traders and speculators have shifted their attention away from Ukraine, but palladium surged over $800/oz, its highest since August 2011 on concerns the standoff between major producer Russia and the West over Crimea could escalate.

NATO’s top military commander said overnight that Russia had built up a "very sizeable" force on its border with Ukraine and Moscow, and may have Moldova in its sights after annexing Crimea.

General Philip Breedlove, commander of U.S. and NATO forces in Europe, warned that Russian forces were amassing just to the east of Ukraine and are “very, very sizeable and very, very ready”. The forces were sufficiently large to “run” over to Transnistria on Ukraine’s south western border, he said. “Russia is acting much more like an adversary than a friend,” he warned.

Premiums for gold bars in Singapore and Hong Kong were unchanged from last week at $1 over spot London prices.

In Tokyo, gold bars were offered at premiums of up to 25 cents to the spot London prices, higher than zero last week as supply tightened.

Interestingly, there is talk of Japan exporting gold to London. "Japan’s fiscal year ends this month and some trading houses are closing their positions. They have exported their gold stocks to London, so there’s a bit of shortage in physical supply," a dealer in Tokyo told Reuters.

Bloomberg reports that gold analysts and traders are bearish on gold prices this week and the most bearish since 2009:

Gold traders are the most bearish in more than four years after the U.S. Federal Reserve indicated they’ll probably increase interest rates by the middle of next year, curbing demand for the metal as store of value.

Sixteen analysts surveyed by Bloomberg News expect gold to fall next week, five are bullish and one neutral, the highest proportion of bears since July 2009.

“Gold had become overbought after its surge to six-month highs and was due profit taking and a correction,” said Mark O’Byrne, a director in Dublin at brokerage GoldCore Ltd., which has more than $200 million in bullion under management. “The abatement of tensions between Russia and the West has contributed to the pullback and momentum could lead to further falls next week.”

Gold is vulnerable to further weakness this week, after last week’s sell off. However, from a contrarian perspective the degree of bearishness may suggest that gold’s sell off is nearly over and gold could surprise to the upside this week – especially should geopolitical or other events lead to a renewed bout of risk off and safe haven gold buying. 

Most importantly, the fundamentals remains very sound and should result in higher prices in the coming months. Those intending allocating to bullion, should consider using the price pullback to accumulate on the dip and cost average into your bullion allocation.

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Mark O'Byrne
Executive Director

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