Negative investment flows out of Exchange Traded Products, both before and more importantly after the Fed announcement, represent a somewhat worrying sign, especially for those looking for the rally to continue.
LONDON: Gold rallied 4% on Wednesday following the surprise announcement by US Fed Reserve Chief Ben Bernanke that stimulus measures would continue amidst a weaker outlook on US economy. However, the rally looks unsustainable on a weak ETF investments, according to Ole S Hansen, Head of Commodity Strategy at Saxo Bank.
US real yields have moved lower, especially since yesterday, bringing them more in line with the current gold.
"As we move towards December, tapering talk will re-emerge, unless economic data continues to deteriorate and this should once again lead to some price pressure into the new year. For now though the most likely range over the coming month looks like USD 1,275/ounce to USD 1,488/ounce which if reached would represent a 50 percent retracement of the October 2012 to June 28 sell-off."
Negative investment flows out of Exchange Traded Products, both before and more importantly after the Fed announcement, represent a somewhat worrying sign, especially for those looking for the rally to continue. During the past week investment flows have been negative by 18 tons. This indicates the continuation of subdued interest for gold ETPs during the past couple of months, despite the price recovering from the June lows. The attitude of institutional investors towards gold as an asset class is key as investment demand is needed to support the already known demand from the physical gold market. Crude oil losing momentum with supply returning.
courtesy of bullionstreet
No comments:
Post a Comment