Is the big picture still positive for gold?
*Reuters, by Harpreet Bhal, October 14, 2011:
'Gold rose on Friday, on track to post its biggest weekly gain in
more than a month, with caution prevailing ahead of a G20 meeting whose
agenda will be dominated by the euro zone debt crisis and steps to
tackle contagion.
Spot gold rose 0.4 percent to $1,671.99 an ounce at 1139 GMT, from
$1,666.20 late in New York on Thursday.
Reflecting growing concern about the region's debt crisis, ratings
agency Standard and Poor's downgraded the long-term credit rating of
Spain by one notch, just as policymakers get ready to pressure Europe
to act swiftly to tackle its financial woes at a weekend meeting.
Although investors are not expecting any concrete resolutions to the
debt crisis, they hope it will provide an opportunity for officials to
agree on the outlines of a plan in time for a European Union summit on
October 23.
'The big picture remains positive for gold. The supply-demand
fundamentals are very much in place and there has been an augmentation
in that rally by economic fears,' said Ross Norman of Sharps Pixley.
'Presently gold sits toward the top end of its trading range . . . and
awaits fresh impetus - physical demand is robust and there is good
support below this market.'
Also helping boost gold was a fall in the dollar, which dipped against
a basket of currencies. A weak dollar makes commodities priced in
the U.S. unit cheaper for holders of other currencies.
Gold prices are up 2.3 percent so far this week, on track to post its
strongest weekly gain since early September.
U.S. gold gained 0.4 percent to $1,674.80 an ounce, while spot silver
rose 0.2 percent to $31.85 an ounce.
FORECASTS LOWERED
UBS reduced its 2011 average gold price to $1,615 from $1,665 to allow
for mark-to-market adjustments and the impact of a stronger dollar, but
kept its 2012 forecast at $2,075.
'Our core view is that ongoing global macroeconomic disappointments,
the inevitability of further negative turns in the European sovereign
debt crisis, and low business, consumer and investor confidence will
lead to gold being increasingly used as the line of defense against
negative market outcomes,' the bank said in a research note.
The most serious risk to gold is a rapid deterioration in bank funding
and escalating liquidity concerns, it added.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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