SHANGHAI, Sep. 15 (SMM) – A weak US dollar and falling economic data out of the Germany helped drive up gold prices. Spot gold prices closed at USD 1,269.80 per ounce after hitting an all-time high of USD 1,275.68 per ounce.
Precious Metals Generally Advance
Supported by investor greater interest in precious metals, spot silver price was last at USD 20.43 per ounce after posting a 2-1/2-year high during the session; spot platinum price was last at USD 1,587.00 per ounce and approached a 6-week high of USD 1,590.00 per ounce in the session; spot palladium was last at USD 550.50 per ounce after reaching a 4-1/2-month peak of USD 551 per ounce. In general, price of precious metals gained across the board.
Slowdown in Global Economic Recovery Drives Gold Prices Higher
Gold prices have been on an upward track since the beginning of 2010. The sovereign debt crisis in Europe starting in 2009 increased safe-haven demand, and gold prices climbed in response, but later prices moved lower from June to July when the European debt crisis gradually eased. Gold prices advanced again after hitting a yearly low in July, with short-term downward corrections reported after hitting a new high in June. Recent US employment and consumption data shows the pace of US economic recovery may slow again. Meanwhile, the ZEW Center for European Economic Research in Mannheim said on September 14th that its index of investor and analyst expectations in September dropped to minus 4.3 from August’s 14, and this index has declined for five consecutive months, setting a new low since February 2009. German investor confidence in September fell to a new low over 19 months, with declines larger than economists’ forecast, indicating the Euro-zone economic outlook is not optimistic. This data triggered market concerns over the Euro-zone economic system, which serves as one reason behind soaring gold and other precious metals prices overnight, with the safe-haven demand pushing up gold prices to a record high.
Funds Always Favor Gold
With intensified concern over possible economic downturn and lower risk appetite, precious metals have become inventors’ favorite in the financial market. According to data released on Monday from Commodity Futures Trading Commission (CFTC), speculators increased gold positions before the slip of the US dollar index. Data in the week ended on September 10 showed that, noncommercial long positions were 291,762 lots, up by 172,533 lots compared to the week ended on August 2. Noncommercial short positions were 27,129 lots, down 22,752 lots from the week ended on August 2. Noncommercial net long positions were 264,633 lots, up by 195,285 lots compared to the level ended on August 2. It can be seen that speculators have always been optimistic towards gold prices. With regard to gold positions held by global gold fund as of September 14th, the top three Funds are listed below. SPDR Gold Shares: 41.7544 million ounce of gold, worth of USD 528.31 million, up by 527,800 ounce compare to the week ended on August 2; Gold Bullion Securities: 4.0608 million ounce of gold, worth of USD 51.69 million, up by 150,300 ounce compare to the week ended on August 2; ETFS Physical Gold: 4.1138 million ounce of gold, worth of USD 5.8 million.
Gold Prices to Gain Further
SMM believes that traders will continue to look for safety investment, given the existing unsteady recovery of global economy, increased risk aversion sentiment, and a weak US dollar. In this context, price of gold and other precious metals will continue to advance. SMM expects gold prices will likely reach USD 1,350 per ounce by the end of this year.
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