{"id":37271,"date":"2013-04-03T08:14:28","date_gmt":"2013-04-03T12:14:28","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=37271"},"modified":"2013-04-03T08:14:28","modified_gmt":"2013-04-03T12:14:28","slug":"gold-faces-headwinds-if-economy-recovers-increased-risk-appetite-reflected-in-red-hot-stock-market","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/04\/03\/gold-faces-headwinds-if-economy-recovers-increased-risk-appetite-reflected-in-red-hot-stock-market\/","title":{"rendered":"Gold “Faces Headwinds if Economy Recovers”, Increased Risk Appetite Reflected in “Red Hot Stock Market”"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Ben Traynor<\/strong>
\nBullionVault<\/strong><\/a>
\nWednesday 3 April 2013, 08:00 EST<\/strong><\/p>\n

FOLLOWING a sharp drop yesterday, the gold price traded near one-month lows Wednesday
\nmorning, hovering just above $1570 an ounce by lunchtime in London, as stock markets ticked
\nlower following gains yesterday.<\/p>\n

Silver meantime climbed back above $27.30 an ounce, having fallen to an eight-month low below
\n$27, while broader commodities also ticked lower.<\/p>\n

A day earlier, gold fell sharply at the start of Tuesday’s US trading, continuing to trade lower when
\nAsia opened on Wednesday, with analysts citing stock market gains and better-than-expected US
\nfactory orders data as factors weighing on gold.<\/p>\n

“The futures market is no doubt mainly to blame for the latest sudden sell-off,” says today’s
\ncommodities note from Commerzbank.<\/p>\n

“[Gold’s fall] worsened after the US stock market started to move higher [on Tuesday],” adds Ed
\nMeir, metals analyst at brokerage INTL FCStone.<\/p>\n

“This was a clear signal that it was safe for more fund money to abandon commodities and head
\ninto the red-hot equity markets.”<\/p>\n

The S&P 500 index came within 0.2% of its 2007 intraday high during Tuesday’s trading.<\/p>\n

“The US economy is one of the best-performing ones,” SAYS Patrick Moonen, senior strategist at
\nING Investment Management.<\/p>\n

“When it comes to the equities rally we’ve had this year, we think there is still more to come.”<\/p>\n

“I’d be skeptical about continuing the stronger momentum that we saw in the first quarter,” counters
\nTom Elliott, global strategist at JPMorgan Asset Management.<\/p>\n

“It very rarely happens you get two such strong quarters in a row…I think what we’ll be seeing is
\nprobably investors over the next three months looking for any slight excuse to take profits.”<\/p>\n

“Gold prices are likely to face more headwinds, should equities continue to rally,” says a note from
\nHSBC.<\/p>\n

“Furthermore, demand for safe-haven assets, which was a plank supporting bullion prices in late
\nMarch, [seems] to have eased.”<\/p>\n

“Ascribing gold weakness to equity strength is shorthand for talking about risk appetite,” adds
\nDavid Jollie, strategic analyst at Mitsui Precious Metals.<\/p>\n

“There is certainly a degree of optimism about the US economy, and that should lead to some
\nreductions in gold long positions…there is scope for gold to strengthen if economic data isn’t as<\/p>\n

strong as people are hoping, but at the moment, there’s a lack of justification to buy in the short
\nterm.”<\/p>\n

The consensus forecast among analysts is that this Friday’s nonfarm payrolls report will show the
\nUS economy added 200,000 jobs last month, while the unemployment rate is expected to hold
\nsteady at 7.7%.<\/p>\n

The world’s biggest gold exchange traded fund meantime continued to see outflows Tuesday, with
\nthe volume of gold held to back SPDR Gold Trust (ticker: GLD) shares dropping eight tonnes to
\n1208.9 tonnes, its lowest level since July 2011.<\/p>\n

Credit Suisse Wednesday cut its 2013 gold price forecast by 9.2% to $1580 an ounce, while its
\nsilver price forecast was cut 11.5% to $28.50 an ounce.<\/p>\n

“By long-term historical standards gold remains overvalued, both in real terms and relative to other
\ncommodities and assets,” Credit Suisse said.<\/p>\n

Over in Europe, Cyprus today agreed terms for a \u20ac1 billion loan from the International Monetary
\nFund to add to the \u20ac9 billion bailout agreed with other Eurozone members. Cyprus’s central bank
\nmeantime has unfrozen 10% of deposits over \u20ac100,000, the limit above which deposits are not
\ninsured.<\/p>\n

Looking ahead to Thursday, the Bank of Japan is due to announce its first policy decision since
\nHaruhiko Kuroda took over as governor. Kuroda said last month the BOJ “will do whatever we can
\ndo” to end deflation in japan, while the country’s prime minister Shinzo Abe said this week that the
\ncentral bank should “display a strong commitment to create so-called inflationary expectations”.<\/p>\n

Ben Traynor<\/strong><\/a>
\nBullionVault<\/strong><\/a><\/p>\n

Gold value calculator | Buy gold online at live prices<\/strong><\/a><\/p>\n

Editor of Gold News, the analysis and investment research site from world-leading gold ownership
\nservice BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-
\nrunning investment letter. A Cambridge economics graduate, he is a professional writer and editor
\nwith a specialist interest in monetary economics. Ben can be found on Google+<\/p>\n

(c) BullionVault 2013<\/p>\n

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best
\nplace for your money, and any decision you make will put your money at risk. Information or
\ndata included here may have already been overtaken by events \u2013 and must be verified elsewhere \u2013
\nshould you choose to act on it.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

London Gold Market Report from Ben Traynor BullionVault Wednesday 3 April 2013, 08:00 EST FOLLOWING a sharp drop yesterday, the gold price traded near one-month lows Wednesday morning, hovering just above $1570 an ounce by lunchtime in London, as stock markets ticked lower following gains yesterday. Silver meantime climbed back above $27.30 an ounce, having … <\/p>\n

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