A week in gold: Demand on the rise despite dollar strength
London (Jan 10) Gold settled into a relatively tight range around US$1,210 an ounce in the first full trading week of the year.
December’s weakness in the precious metal has been reversed so far in 2015, even with the rising dollar.
The greenback and gold traditionally head in the opposite direction, but gold’s dislocation from the dollar suggests other forces are at play.
Safe-haven demand appears to be rising again as oil prices slump and concerns grow about Greece exiting the euro.
Scotiabank today said more evidence is needed before this can be considered a bullish picture.
Prices have not run away on the upside, which suggests sentiment may be slowly changing from being bearish to being less bearish to being mildly bullish.
Ole Hansen, head of commodity strategy at Saxo Bank, still sees a great deal of uncertainty regarding the near-term direction of gold.
However, further down the line, influential fund manager Evy Hambro has backed the precious metal to recover from its slump.
On Thursday, the manager of Blackrock's US$1.5bn Gold & General fund said the price has finally bottomed-out and is set to enter a “new phase”.
He reckons that loose monetary policy around the world and deflation fears will see more people reaching out to safe haven assets - and gold is the natural safe-play.
In turn, this bodes well for miners and Hambro, who buys shares in gold miners rather than the metal itself said gold shares are starting to post huge moves for every small movement upwards in the price of gold.
Bears though still see problems for gold if equity markets do well and if the dollar remains on an upside trajectory, but if there is a sizeable equity correction or a country default safe haven demand could push the price above US$1,350 again.
Shortly after the start on Wall Street, spot gold was US$6 higher at US$1,213 despite another strong month for US job creation which boosted the dollar.
At 252,000 new jobs added in December, the non-farm payrolls number was well above forecasts but there was some disappointment over weaker reads on hours worked and wage growth.
US unemployment overall declined to 5.6% from 5.8%.
Source: ProactiveInvestors.uk
