Gold Robust Physical Demand

By: Mark_OByrne

Gold rose nearly 1% yesterday as the dollar gave up some of its gains in recent days. Gold has remained slightly weaker in European trading and this is likely because of continuing dollar strength, particularly against the euro.

In the short term there may be further selling and consolidation but the medium to long term fundamentals mean that gold should head markedly higher in the coming weeks, especially as demand remains robust and supply tight as seen in the near record ETF gold inventories and in COMEX warehouses.

COMEX gold inventories were rapidly depleted since last Friday – deliveries of the expired December contract took place on some 39% of contracts in just these three first days.

Figures from the NYMEX website which were updated overnight show that 1,147,300 oz of gold have been taken delivery of out of a registered inventory of 2,908,224 oz. or some 39.5% of registered inventories (“registered” metals are available for physical delivery) have been delivered in the first three days of possible delivery.

On the face of things there looks like there could be a possible default of the COMEX December gold contract as some analysts have been predicting. However, deliveries would have to accelerate in the remain delivery days (until December 29th) if this is to come to pass.

Sources:

[1] COMEX precious metals warehouse stocks: http://www.nymex.com/warehouse.aspx

[2] COMEX precious metals daily deliveries: http://www.nymex.com/media/delivery.pdf

By Mark O'Byrne, Executive Director

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