WASHINGTON, Dec 8 — Speculators boosted bullish gold bets to a three-month high on signs central banks will act to counter low inflation, reviving the allure of bullion as a hedge.
The net-long position in New York futures and options climbed for a third week, the longest expansion since July, government data show. Short holdings fell to a 14-week low.
Futures rebounded 5.3 per cent since touching a four-year low on November 7. European Central Bank President Mario Draghi said last week that policy makers “won’t tolerate” a prolonged period of low inflation, as officials consider increasing asset purchases. China lowered interest rates to spur economic growth, while Japan has expanded its unprecedented stimulus program.
“Prices have to trade back higher because of the sheer size of the monetisation of this debt,” Frank Holmes, the chief investment officer at US Global Investors in San Antonio, which oversees about US$1.2 billion (RM4.17 billion), said by phone December 5. “How do you unwind that? Gold should be looked at as an insurance.”
The net-long position rose by 20 per cent to 79,497 futures and options in the week ended December 2, the highest since August 26, according to US Commodity Futures Trading Commission data. Holdings more than doubled in three weeks.
Futures climb
In New York, futures rose 1.3 per cent to US$1,190.40 an ounce last week. The Bloomberg Commodity Index dropped 0.7 per cent and the Bloomberg Dollar Index rose 1.4 per cent. The MSCI All- Country index of world equities fell 0.3 per cent.
The ECB’s Governing Council expects to consider a package of broad-based asset purchases next month, two central-bank officials familiar with the deliberations said last week. The Bank of Japan boosted its asset purchases in October. China on November 21 lowered its key interest rate for the first time since July 2012. Bullion priced in euros climbed about 11 per cent this year, and 15 per cent in yen.
Futures fell to US$1,130.40 on November 7, the lowest since 2010, sparking speculation that demand will climb from buyers of bars, coins and jewellery. India, which accounts for about a quarter of global bullion demand, eased import rules on the metal in late November. Gold shipments to Turkey, the fifth-largest consumer in the third quarter, climbed last month to the highest in more than six years.
Money supplies
Gold surged 70 per cent from December 2008 to June 2011 as central banks increased money supplies on an unprecedented scale, spurring inflation concerns. The metal tumbled 28 per cent in 2013, the biggest drop in three decades, after some investors lost faith in bullion as a store of value.
Prices fell 1.4 per cent on December 5 after a report showed US employers added the most jobs in November since early 2012. Gains for the labour markets are increasing speculation that the Federal Reserve is getting closer to raising interest rates, reducing the allure of gold, which generally offers investors returns through increasing prices.
A rally in equities and the dollar cut the appeal of gold as an alternative asset. The dollar rose to a five-year high against a basket of 10 currencies on December 5, and the Standard & Poor’s 500 index of stocks touched an all-time high the same day. The ECB discussed buying all assets except bullion as it readies for possible stimulus measures, Draghi said last week.
Market ‘Alternatives’
“There is very little prospect of a significant gold upside unless we see another financial crisis,” Jessica Fung, a commodities analyst at BMO Capital Markets in Toronto, said in a December 4 interview. “When the markets have alternatives to gold, and they have other assets where they can generate decent returns, gold is simply not there for the trade.”
Net-wagers across 18 US traded commodities fell 7.8 per cent to 733,384 contracts as of December 2, the first decline in eight weeks, CFTC data show.
Bets on higher oil prices rose 14 per cent to 184,374 contracts. West Texas Intermediate slumped 33 per cent this year, diminishing the likelihood that consumer prices will accelerate and reducing demand for bullion as an inflation hedge. The correlation between gold and oil rose close to 0.4 last week, the strongest since July 2013.
Farm wagers
Net-short wagers on copper, betting on price declines, expanded to 5,919 contracts from 1,872 a week earlier.
A measure of net-long positions across 11 agricultural commodities fell 13 per cent to 443,818 contracts, the biggest drop since mid-September.
Bullish bets on cattle dropped by 2.3 per cent to 107,007 contracts. Futures slumped 2.6 per cent last week, the biggest decline for a most-active contract since August. Prices reached an all-time high last month after the US herd started the year at the smallest since 1951.
“Producers are holding back inventory and they’re growing the herd, in swine as well as cattle,” Michael Underhill, the chief investment officer at Pewaukee, Wisconsin-based Capital Innovations, which oversees about US$1 billion, said in a December 4 interview. “This year, we had a bumper crop in corn, and they were able to feed and fatten them up.” — Bloomberg
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8.10.2014
Gold rises as global growth concerns spark safe-haven bids
SINGAPORE (Reuters) - Gold extended gains to a third session on Wednesday as growing concerns over the global economy prompted safe-haven bids, while the return of top consumer China from a week-long holiday also lifted prices.
Other safe-haven assets such as bonds and the Japanese yen also got a boost as Asian stocks fell and oil prices were mired near their lowest in more than two years.
"For the moment, it does look like gold could see some more upside due to the risk averse sentiment," said a precious metal trader in Hong Kong. "But I would still bet that prices would drop back to $1,180 than sustain these gains."
Spot gold rose further above the key level of $1,200 per ounce, gaining 0.3 percent to $1,211.89 an ounce by 0327 GMT. The metal had fallen to $1,183.46 earlier in the week - its lowest since June 2013.
Gold is well-bid as stocks fell after the International Monetary Fund cut its global economic growth forecasts for the third time this year on Tuesday, warning of weaker growth in core euro zone countries, Japan and big emerging markets like Brazil.
Equities were also hurt as German industrial output fell far more than expected in August, posting its biggest drop since the financial crisis in early 2009, the latest figures to raise question marks about Europe's largest economy.
"Despite a pause in the recent sell-off for gold and the possibility of a short covering rally, the bullish outlook on the dollar is likely to constrain any potential bullion rallies," HSBC analyst James Steel said.
The dollar has gained in recent weeks on speculation that the Federal Reserve would raise interest rates sooner and faster than expected.
Markets will be eyeing minutes of the Fed's last policy meeting due later on Wednesday for clues on when the U.S. central bank could raise rates. Higher rates would dent demand for gold, a non-interest-bearing asset.
For now, bullion investors were keenly watching the Shanghai Gold Exchange to gauge buying interest in China, the top buyer of the metal. Chinese markets had been closed for a week for the National Day holiday.
Premiums on the exchange - the platform for all physical trades in China - were about $5-$6 an ounce above global spot prices on Wednesday, compared with about $3 before Chinese markets closed for the holiday.
Sustained robust buying from China could support a rally in gold.
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17.01.2012
EMAS dijangka cecah RM503 per gram 2020?
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03.10.2012
EMAS @ Unit Amanah?
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18.09.2014
Gold futures contract lower in early session
The gold futures contract on Bursa Malaysia
Derivatives traded lower on lack of demand.
As at 9.50 am, only two contract months were traded.
September 2014 fell 22 ticks to RM127.25 a gramme and October 2014 declined 19 ticks to RM127.50 a gramme.
Turnover stood at 55 lots while open interest totalled 3,345 contracts.
At 9.30 am, physical gold was 74 sen lower at RM123.10 a gramme.
– Bernama, September 18, 2014.
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