Gold Steady-Firmer on Mild Short Covering; Weaker U.S. Dollar Also Supportive

New York (Nov 13)  Gold prices are steady to slightly higher in early U.S. trading Thursday. There is more
 tepid short covering by the shorter-term futures traders and some bargain hunting in the cash market. The weaker U.S. dollar index on this day is also a mildly bullish underlying factor for the precious metals. December Comex gold was last up $2.20 at $1,161.30 an ounce. Spot gold was last quoted up $0.20 at $1,162.40. December Comex silver last traded up $0.077 at $15.695 an ounce.

In overnight news, the World Gold Council reported Thursday that worldwide demand for gold dropped by 2% from the same reporting period last year. Chinese demand for gold jewelry dropped sharply in the third quarter, but demand from India rose sharply in the period. I’m going to repeat some sage advice given by Warren Buffet: “Be greedy when others are fearful and be fearful when others are greedy. Well, the gold market traders and investors are mostly in a fearful mood at present. Studying markets’ price history shows the present bust in gold will at some point turn into a value-buying opportunity—before the boom cycle begins. I’m not going too far out on a limb in forecasting gold prices will reach record highs in less than 10 years, and maybe in less than five.

China industrial production in October was reported at up 7.7% year-on-year, which is below the 8% rise that was expected. This latest economic data falls in line with Chinese economic reports that have mostly missed to the downside of expectations. While China’s economic readings are still the envy of major industrial countries, the robust growth seen in recent years is decelerating.

A European Central Bank survey showed that forecasters see this year’s European Union overall inflation rate at 0.5% and see 2015 inflation coming in at 1.0%. They see EU inflation in 2016 at 1.4%. All these figures are still well below the 2.0% inflation rate the ECB has targeted.

Reports Wednesday said a Russian military convoy was headed for the Russia-Ukraine border. Markets did not pay a whole lot of attention to that news. However, the Russia-Ukraine conflict could move from the back burner of the market place to the front burner in a hurry. Such would very likely be supportive for safe-have assets such as gold and U.S. Treasuries.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the weekly DOE liquid energy stocks report and the monthly Treasury budget statement. Fed chief Janet Yellen also makes a speech at an economics forum.

Source: KitrcoNews