{"id":43172,"date":"2013-10-18T08:51:52","date_gmt":"2013-10-18T12:51:52","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=43172"},"modified":"2013-10-18T08:51:52","modified_gmt":"2013-10-18T12:51:52","slug":"shorts-wrongfooted-gold-us-default-swerve-new-longs-lacking","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/10\/18\/shorts-wrongfooted-gold-us-default-swerve-new-longs-lacking\/","title":{"rendered":"Shorts “Wrongfooted” on Gold by US Default Swerve, But New Longs “Lacking”"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Adrian Ash<\/strong>
\nBullionVault<\/strong><\/a>
\nFri 18 Oct 08:25 EST<\/strong><\/p>\n

WHOLESALE prices for physical gold held near $1320 per ounce this morning in London, gaining 3.5% from last Friday after the mid-week US debt-limit deal saw what one dealer called “heavy short covering and some fresh buying.”<\/p>\n

US Treasury yields fell sharply as prices recovered further on Friday. World stock markets rose to 5-year highs.<\/p>\n

Silver bullion traded in London meantime fell back from another attempt at $22 per ounce, trading 2.5% up for the week.<\/p>\n

\u00a0“The whole [debt limit] mess is just being postponed by 3-4 months,” says Commerzbank analyst Carsten Fritsch.<\/p>\n

\u00a0“[This] makes a reduction of Fed asset purchases rather unlikely for the time being,” encouraging fresh\u00a0gold investment<\/a>\u00a0as the US central bank continues its quantitative easing of $85 billion per month.<\/p>\n

\u00a0Thursday’s jump in gold was “one of [its] most convincing moves to the upside of recent weeks” says Edward Meir at INTL FC Stone.<\/p>\n

\u00a0“[But] the precious metal still needs to do more work before some of the technical damage is repaired.”<\/p>\n

\u00a0So-called “gold shorts” who were positioned to profit if gold fell had to close their bets fast as the metal jumped this week, says Societe Generale analyst Robin Bhar<\/p>\n

“We [had also] worked on the basis that gold price action was bearish, and that if we didn’t have a debt default, gold would fall.<\/p>\n

\u00a0“There were probably lots of shorts in the market…All of those guys have been wrongfooted, and have had to cover.”<\/p>\n

\u00a0On the other side of the trade, however, “Gold is failing to attract new longs [ie, bullish positions] in the futures market,” says Walter de Wet at Standard Bank, “which is an ongoing concern.<\/p>\n

\u00a0“Furthermore, the risk of more Exchange Traded Fund liquidation must have increased now that uncertainty around a US default has eased.”<\/p>\n

\u00a0The giant SPDR Gold Trust \u2013 the world’s largest gold ETF, listed in New York (ticker: GLD) \u2013 yesterday shed metal from the gold backing its shares for the 11th time in 20 sessions, taking its total allocation to 882 tonnes, the lowest level since February 2009.<\/p>\n

\u00a0The GLD last added metal one month ago. It has since shed 30 tonnes as shareholders liquidated positions.<\/p>\n

\u00a0Meantime in India, where gold today held $100 above London benchmark on a continued shortage of metal, new data showed exports of gold jewellery rising 16.5% by value to $654 million in September.<\/p>\n

\u00a0Thanks to a collapse in gold imports, however \u2013 caused by the government’s anti-gold rules and duty hikes \u2013 the industry has seen jewelry exports fall 60% over the last half-year compared with April-Sept. in 2012.<\/p>\n

\u00a0The\u00a0Economic Times of India\u00a0said today that HSBC is\u00a0closing its retail investor stock brokerage<\/a>\u00a0in the country, at the cost of 300 jobs. The bank cited a shift by private investors to equity derivatives trading, as well as a preference for gold investing and real estate over stocks.<\/p>\n

\u00a0“With inflation still elevated in many markets and interest rates not offering adequate compensation,” says a separate report from HSBC economists, “[we] expect Asia\u2019s voracious appetite for gold to persist.<\/p>\n

\u00a0“Asia is going for gold. Over recent years, demand has soared.”<\/p>\n

Adrian Ash<\/strong><\/span><\/a><\/p>\n

BullionVault<\/strong><\/span><\/a><\/p>\n

Gold price chart, no delay | Buy gold online<\/strong><\/span><\/a><\/p>\n

 <\/p>\n

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.<\/p>\n

 <\/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 place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events \u2013 and must be verified elsewhere \u2013 should you choose to act on it.<\/p>\n

 <\/p>\n

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

London Gold Market Report from Adrian Ash BullionVault Fri 18 Oct 08:25 EST WHOLESALE prices for physical gold held near $1320 per ounce this morning in London, gaining 3.5% from last Friday after the mid-week US debt-limit deal saw what one dealer called “heavy short covering and some fresh buying.” US Treasury yields fell sharply … <\/p>\n

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