Quotes from Commerzbank Corporates & Markets:
-Up one minute, down the next – that pretty much sums up how the gold price performed yesterday as well. This morning sees the gold price trading at $1,150 per troy ounce, meaning that it has almost entirely shed the gains it had achieved on Friday afternoon thanks to the covering of short positions. A firmer US dollar is generating renewed selling pressure, the situation being compounded by ongoing outflows from the gold ETFs. Their holdings were reduced by a further 1.9 tons yesterday after last week saw the largest weekly outflow so far this year.
-Admittedly, US gold coins are enjoying increased demand: in the first ten days of November, 36,000 ounces of American Eagle gold coins were already sold, according to the U.S. Mint. This is more than half of the quantity sold in the whole of the previous month, which after all was the second-highest this year. Nonetheless, this is merely equivalent to somewhat more than one ton of gold and is thus considerably less than has been withdrawn per day from gold ETFs of late.
-The outflows are likely to continue for as long as US equity markets carry on rising to ever new record highs. A second key factor required for prices to stabilize would be a noticeable revival of physical demand in Asia, though this has failed to materialize as yet. In the short term, in other words, there is a greater risk of last Friday’s 4½-year low of $1,131 per troy ounce being put to the test again.
The material has been provided by InstaForex Company – www.instaforex.com