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Gold Dull Trade, Silver Dead Flat, Chartists Split on Medium Term Outlook

Commodities / Gold and Silver 2013 Nov 06, 2013 - 04:20 PM GMT

By: Adrian_Ash


WHAT one trader called "very dull" trade saw gold trade unchanged from last Friday's finish of $1317 per ounce lunchtime in London.

Silver also held unchanged midweek at $21.90 after a brief spike above $22.00 per ounce.

World stock markets were meantime flat overall, while commodities reversed Tuesday's small drop.

Ahead of tomorrow's monthly policy vote by the European Central Bank, the Euro currency crept back above $1.36 following stronger-than-forecast service sector data but a drop in retail sales.

That nudged the gold price in Euros down €1 per ounce to €975.

Priced in Dollars gold "has seen a lower high for the past daily 6 consecutive trading sessions," notes Scotiabank's latest technical analysis of the charts.

"We believe the market is selling gold on any bounce while it remains below $1330."

But last week's dip to $1310 now means Bank of America Merrill Lynch strategist MacNeil Curry is "long gold", recommending clients buy the metal because "the medium-term trend has turned bullish."

Citing "the impulsive gains from the $1251 low of Oct.15 low, and the break of the [two-month] downtrend," Curry is targeting a possible run up to $1500 per ounce – which he sees as "long-term resistance."

"The jury is still out," counters the latest technical analysis from Commerzbank's Axel Rudolph in Frankfurt, "as to which direction the medium-term trend will take.

"But we still favour weakness."

Silver meantime "remains longer term bearish while trading below the $23.12 resistance area," he adds.

Australia's Perth Mint, which refines some 300 tonnes of gold per year, said today that gold coin sales rose 13% in October from September.

"We're desperately trying to keep up with production," the Wall Street Journalquotes Ron Currie, head of sales and marketing, who adds that the Perth Mint "sold out" of 1-ounce lunar silver coins "in just over a month."

Although gold demand from Western retail investors grew in October, however, money-managers using the SPDR Gold Trust to gain exposure to gold prices cut their holdings by a further 3.6% last month.

Holdings in the SPDR (ticker: GLD), the world's largest exchange-traded fund by value at its peak in 2011, ended Tuesday unchanged from Monday at 866 tonnes, a 57-month low.

Looking at gold options contracts – which give traders the right to buy or sell at certain prices in the future – "We expect lower gold prices for the coming years," says a note from Dutch bank ABN Amro's analysts.

"The bias [amongst options traders] turned negative in October 2012...[and while] the recovery of gold prices since June has resulted in a less negative bias, the market has not come close to being neutral."

Meantime in India – the world's No.1 consumer gold market, but likely to be overtaken in 2013 by China – premiums above London's benchmark gold price held on Wednesday around $70 per ounce, says Reuters, after halving from last week's record levels as the traditionally strong Diwali festival ended.

"Demand is tapering off," the newswire quotes Bachhraj Bamalwa of the All India Gems & Jewellery Trade Federation. "There won't be buying for another week" until the Hindu wedding season returns.

By Adrian Ash

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

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