Gold Price Pushes to 6-Week High as Market Grows More Hopeful
January 22, 2014 6:15 am
Those who trade gold caused the precious metal to rise to it highest price in six weeks on Jan. 20, as global market participants became more optimistic about the commodity.
Gold futures scheduled for February delivery rose to as much as $1,261.30 per ounce on the Comex division of the New York Mercantile Exchange, according to Investing.com. This represented the highest price for this particular contract since Dec. 11. Later, February gold futures pared these gains, trading at $1,256.00 an ounce. This represented a 0.35 percent increase for the day.
Gold has been rising steadily in 2014
The precious metal has been performing well lately, as thus far in January, it has risen 4.4 percent, Bloomberg reported. In addition to enjoying this return for the month, the precious metal experienced four consecutive weeks of gains. Also, industry data has revealed that lately, market participants increased their wagers that the commodity will continue to rise in price.
Figures provided by the U.S. Commodity Futures Trading Commission indicated that during the week that ended on Jan. 14, the net length position held for gold was 43,277 futures and options, according to the news source. This figure was 7.6 percent higher than the prior period. While short wagers increased by 2.9 percent during the week, bets that the precious metal will appreciate rose by 4.7 percent.
Expert notes importance of Chinese demand
Several factors have been cited as helping to provide upward pressure on the price of the precious metal. Gold is likely benefiting from expectations that Chinese demand for the commodity will probably strengthen in the future, Fawad Razaqzada, who works for Forex.com as a technical analyst, wrote in a note, MarketWatch reported.
The market expert cited the sharp drop in value that the precious metal experienced in 2013, as prices fell roughly 28 percent, according to the news source. He said that seasonal demand for the commodity would be robust, since it has experienced such severe price declines recently. Market participants in the Asian nation have been flocking to the precious metal, and last year, there was an almost 100 percent surge in the number of deliveries made by the Shanghai Gold Exchange, Bloomberg reported.
“There’s a tremendous divide in the gold market,” Jeff Sica, who serves as the president of Sica Wealth Management, told the news source. “Demand for jewelry in China is still relatively strong, and I think it will remain strong. The bears ignore physical demand and think that gold is not relevant when there’s no economic crisis.”
ETF inflows
Another factor that could serve to bolster the price of the precious metal is the robust inflows that exchange-traded products backed by gold have attracted recently, according to the news source. On Jan. 17, the holdings of SPDR Gold Trust, which is the largest ETP backed by the commodity, experienced their sharpest increase since November 2011. Comparatively, on Jan. 16, the investment vehicle held the least amount of gold since 2009. Analysts working for Commerzbank released a note on Jan. 20, in which they noted that the precious metal could move higher in price in the event that the recent strong inflows that gold ETFs have been enjoying are indicative of changing interest in the metal, MarketWatch reported.
“If this turns out to signal a trend reversal, it is likely to lend buoyancy to the gold price,” the analysts wrote in the note, according to the news source. “The high outflows from the gold ETFs observed since the beginning of last year were one major reason for the weak gold price.”
These market experts are not the only ones who believe that gold prices could do well in the near future, as Danny Laidler, who runs the Australia and New Zealand business of ETF Securities, told Reuters that there are higher odds that the metal will appreciate than depreciate.
“A lot of our clients are still holding onto gold as a risk-event hedge,” he told the media outlet. “I think the worst of the outflows is behind us. We think there is a greater potential for modest gains (in gold prices) this year than for a downside risk.”
In the event that the turbulent price performance that the precious metal experienced last year will be followed by a correction in 2014, gold could easily appreciate. In 2013, the commodity had a rough ride, falling into a bear market in April, after having dropped more than 20 percent from its all-time high. This lackluster performance continued for the next few months, and in June, gold plunged below $1,200 per ounce.
The precious metal then managed to enjoy a few months of gains following this recent low. Even after enjoying some appreciation after dropping to an almost three-year low in June, gold finished 2013 down almost 30 percent.
Those who trade gold caused the precious metal to rise to it highest price in six weeks on Jan. 20, as global market participants became more optimistic about the commodity.
Gold futures scheduled for February delivery rose to as much as $1,261.30 per ounce on the Comex division of the New York Mercantile Exchange, according to Investing.com. This represented the highest price for this particular contract since Dec. 11. Later, February gold futures pared these gains, trading at $1,256.00 an ounce. This represented a 0.35 percent increase for the day.
Gold has been rising steadily in 2014
The precious metal has been performing well lately, as thus far in January, it has risen 4.4 percent, Bloomberg reported. In addition to enjoying this return for the month, the precious metal experienced four consecutive weeks of gains. Also, industry data has revealed that lately, market participants increased their wagers that the commodity will continue to rise in price.
Figures provided by the U.S. Commodity Futures Trading Commission indicated that during the week that ended on Jan. 14, the net length position held for gold was 43,277 futures and options, according to the news source. This figure was 7.6 percent higher than the prior period. While short wagers increased by 2.9 percent during the week, bets that the precious metal will appreciate rose by 4.7 percent.
Expert notes importance of Chinese demand
Several factors have been cited as helping to provide upward pressure on the price of the precious metal. Gold is likely benefiting from expectations that Chinese demand for the commodity will probably strengthen in the future, Fawad Razaqzada, who works for Forex.com as a technical analyst, wrote in a note, MarketWatch reported.
The market expert cited the sharp drop in value that the precious metal experienced in 2013, as prices fell roughly 28 percent, according to the news source. He said that seasonal demand for the commodity would be robust, since it has experienced such severe price declines recently. Market participants in the Asian nation have been flocking to the precious metal, and last year, there was an almost 100 percent surge in the number of deliveries made by the Shanghai Gold Exchange, Bloomberg reported.
“There’s a tremendous divide in the gold market,” Jeff Sica, who serves as the president of Sica Wealth Management, told the news source. “Demand for jewelry in China is still relatively strong, and I think it will remain strong. The bears ignore physical demand and think that gold is not relevant when there’s no economic crisis.”
ETF inflows
Another factor that could serve to bolster the price of the precious metal is the robust inflows that exchange-traded products backed by gold have attracted recently, according to the news source. On Jan. 17, the holdings of SPDR Gold Trust, which is the largest ETP backed by the commodity, experienced their sharpest increase since November 2011. Comparatively, on Jan. 16, the investment vehicle held the least amount of gold since 2009. Analysts working for Commerzbank released a note on Jan. 20, in which they noted that the precious metal could move higher in price in the event that the recent strong inflows that gold ETFs have been enjoying are indicative of changing interest in the metal, MarketWatch reported.
“If this turns out to signal a trend reversal, it is likely to lend buoyancy to the gold price,” the analysts wrote in the note, according to the news source. “The high outflows from the gold ETFs observed since the beginning of last year were one major reason for the weak gold price.”
These market experts are not the only ones who believe that gold prices could do well in the near future, as Danny Laidler, who runs the Australia and New Zealand business of ETF Securities, told Reuters that there are higher odds that the metal will appreciate than depreciate.
“A lot of our clients are still holding onto gold as a risk-event hedge,” he told the media outlet. “I think the worst of the outflows is behind us. We think there is a greater potential for modest gains (in gold prices) this year than for a downside risk.”
In the event that the turbulent price performance that the precious metal experienced last year will be followed by a correction in 2014, gold could easily appreciate. In 2013, the commodity had a rough ride, falling into a bear market in April, after having dropped more than 20 percent from its all-time high. This lackluster performance continued for the next few months, and in June, gold plunged below $1,200 per ounce.
The precious metal then managed to enjoy a few months of gains following this recent low. Even after enjoying some appreciation after dropping to an almost three-year low in June, gold finished 2013 down almost 30 percent.
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