US GOLD OPEN - Bulls continue to hold the reins
NEW YORK (Aug 16) Gold futures held gains Friday amid continued geopolitical tensions in Egypt and strong Asian physical demand.
Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up 30 cents at $1,365.90 an ounce early in the session; however, the yellow-metal yesterday rocketed higher, rising a robust $27.50
“What can one say other than 'wow; that was impressive',” Dennis Gartman, editor of the Gartman Letter, said about Thursday's rally.
“If we must blame anything we shall blame the situation in Egypt, for confusion always puts a bid into gold. We shall add to this the fact that monetary aggregates here in the US have expended materially. We shall add stronger grain and cotton and soft commodity prices to the mix, and we shall add the increased and growing demand for spot gold that seems for the moment to be unquenchable,” Gartman said.
Strong physical demand is perhaps best exemplified by elevated premiums even as the London spot price has broken free from the lower bounds of its recent range. For example, Mumbai premiums are currently at at $30-35 over the London spot for retail customers buying one kilogram bars.
Meanwhile, on the paper gold side of the business, fund managers John Paulson, George Soros and Daniel Loeb either cut dramatically or entirely liquidated their position in the SPDR Gold ETF during the second quarter, which, somewhat counter-intuitively, might be supportive of prices.
“Those positions have weighed upon the markets for a very long while. Now that they are out and now that prices are rising, they shall almost certainly want back in, and where they’d been resistance in the past they are support in the future,” Gartman said.
In the wider-markets, the euro was near unchanged at 1.3350 against the dollar, while Germany's DAX was 0.24 percent lower and France's CAC-40 was up 0.04 percent.
As for the other precious metals, Comex silver for September delivery was last up 9.5 cents at $23.030 an ounce. Trade has ranged from $22.755 to $23.160.
“Some players are suggesting silver is seeing a fresh influx of investor demand from liquidation of blue chip stocks, while others suggest that buying interest might be associated with the rising tensions in Egypt,” the CME Group said in a market commentary.
“With the fresh higher highs on the charts a certain amount of technically based buying might be unfolding in silver, as rising above the $22.00 is thought to be psychologically important,” the exchange added.
Platinum futures for October delivery on the Nymex were down $4.60 at $1,527.70 an ounce and the most-actively traded palladium contract was at $758.95 an ounce, up $2.10.
