Fence sitters looking for a sign


Gold gave up all of yesterday’s gains today to close out the week.  Silver was similarly disposed.  For the day gold was down $9.54 at $1280.33.  For the week, it was down $23.60.  Silver was down 21¢ on the day and 37¢ on the week.

Sharps Pixley’s Lawrie Williams sums up current market conditions as follows:  “The key factor here appears to have been the dollar index which has shown a minor degree of strength after a prolonged period of weakness, but we’re not convinced this ‘strength’ will last. Strength in the dollar tends to mean weakness in the gold price in dollar terms at least. There have been no net sales or purchases in or out of the big GLD gold ETF over the past few days either – and these tend to be a pointer to institutional investment interest in gold – suggesting that the players in this sector are sitting on the fence awaiting some indication of significant price movement in one direction or the other.”

Quote of the Day
“It is only relatively recently that Western capital markets have become aware that Chinese demand for physical gold absorbs large quantities of annual mine production, and that the country is now the largest mining nation by far, extracting it at a rate of over 450 tonnes per annum. Knowledge of China’s overall demand is restricted to deliveries out of the Shanghai Gold Exchange’s vault into public hands, running at about 2,000 tonnes per annum, which with India’s public demand accounts for nearly all global mine extraction of about 3,000 tonnes.” – Alasdair Macleod, GoldMoney

Lawrie Williams alludes to the slack ETF gold demand this past week as an indicator that institutional investors are sitting on the fence.  In this month’s News & Views, we take a close look at the important role professional investors now play in the gold market under the headline: How professional investors radically altered the gold market.

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