Gold Hits 18 Year High
From Market Soapbox 09/24/05 "I believe that the XAU should not go much above 115 and by the end of this year could be under 100, so sorry Gold Member, oh behave!!!"
We also believe that hedge funds are behind golds latest runup and when the European Central Banks start their selling season on Tuesday, there could be a price drop.
Gold prices struck another near 18-year high of $475 a troy ounce, its highest level since January 1988 on Thursday as hedge funds piled into the precious metal on the pretext that higher oil prices threaten to lift inflation and lead to a global economic slowdown.
Traders said one fund this week bought the equivalent of about 3m ounces in one session, or about 4 per cent of annual gold supply, by purchasing gold futures on the Comex market in New York.
Martin Stokes, vice president commodities at JPMorgan said that if the gold price continued to rise at its current pace – it has risen more than 10 per cent since the end of August – it would fall just as rapidly. He said that when gold hit its peak in 1980, it moved from $300 to $850 and back to $300 within about four months.
“Once these big buyers turn sellers, it could be hard to get out and we may see some steep price falls, but we are not there yet. There is still more legs in this market,” he said.
The recent gold price rise has been in the absence of any natural sellers. The signatories to the Central Bank Gold Agreement – the European central banks that have agreed to sell up to 500 tonnes of their gold reserves each year until 2009 – sold their entire annual quota earlier this year.
However, the signatories will be able to start selling from next week when the new selling year starts on Tuesday. “With gold at record prices in euros, it will be tempting for some European banks to sell,” Mr Holmes said.
Gold prices have also been boosted this year by a 10 per cent increase in jewellery demand during the first half of the year, largely from the Indian subcontinent. However, such demand could be threatened by higher gold prices as well as more expenditure directed towards higher fuel bills.
Financial Times
We also believe that hedge funds are behind golds latest runup and when the European Central Banks start their selling season on Tuesday, there could be a price drop.
Gold prices struck another near 18-year high of $475 a troy ounce, its highest level since January 1988 on Thursday as hedge funds piled into the precious metal on the pretext that higher oil prices threaten to lift inflation and lead to a global economic slowdown.
Traders said one fund this week bought the equivalent of about 3m ounces in one session, or about 4 per cent of annual gold supply, by purchasing gold futures on the Comex market in New York.
Martin Stokes, vice president commodities at JPMorgan said that if the gold price continued to rise at its current pace – it has risen more than 10 per cent since the end of August – it would fall just as rapidly. He said that when gold hit its peak in 1980, it moved from $300 to $850 and back to $300 within about four months.
“Once these big buyers turn sellers, it could be hard to get out and we may see some steep price falls, but we are not there yet. There is still more legs in this market,” he said.
The recent gold price rise has been in the absence of any natural sellers. The signatories to the Central Bank Gold Agreement – the European central banks that have agreed to sell up to 500 tonnes of their gold reserves each year until 2009 – sold their entire annual quota earlier this year.
However, the signatories will be able to start selling from next week when the new selling year starts on Tuesday. “With gold at record prices in euros, it will be tempting for some European banks to sell,” Mr Holmes said.
Gold prices have also been boosted this year by a 10 per cent increase in jewellery demand during the first half of the year, largely from the Indian subcontinent. However, such demand could be threatened by higher gold prices as well as more expenditure directed towards higher fuel bills.
Financial Times
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