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Gold Traders Extend Bullish Call On European Debt Crisis
Gold traders are bullish for a sixth week on speculation that Europe’s debt crisis will boost demand from investors seeking to protect their wealth and drive prices higher after moving to within 1 percentage of a bear market.Sixteen analysts surveyed by Bloomberg said they expect a rally next week and 10 were bearish. Another five were neutral. Investors added almost $2 billion to holdings in gold-backedexchange-traded products this month, the most since November, according to data compiled by Bloomberg. Hedge funds and other speculators have increased bets on a rally for four consecutive weeks, U.S. Commodity Futures Trading Commission data show.Enlarge image
One thousand gram gold bars. Photographer: Kerem Uzel/BloombergSpain formally asked for a bailout for its banks on June 25 and Cyprus that day became the fifth member of the 17-nation euro zone to ask for outside help. European leaders agreed today to ease repayment rules for emergency loans to Spanish banks and relax conditions on potential help for Italy. Gold came close to a bear market in May as some investors sold bullion to cover losses in stock markets as $7 trillion was erased from global equities in about two months.“While demand has been weaker for bullion in recent months, it has picked up in the last month,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores everything from quarter-ounce British Sovereigns to 400-ounce bars. “A resolution to the crisis is not going to be seen in the short term. A lot more speculators could pile back into the market.”Prices Slide
Gold tumbled 4.4 percent to $1,598.40 an ounce since the end of March, the biggest retreat since the third quarter of 2008. Bullion is up 2 percent this year which compares with an 8.8 percent slide in the Standard & Poor’s GSCI gauge of 24 commodities and a 3.9 percent advance in the MSCI All-Country World Index of equities. Treasuries returned 2.1 percent, a Bank of America Corp. index shows.The metal fell 3.8 percent last week, the most this year, as the Federal Reserve refrained from announcing a new round of debt purchases to shore up growth. Bank of England GovernorMervyn King told lawmakers June 26 the world isn’t yet halfway through the global financial crisis that began in 2007 and said his backing for more stimulus this month reflected concern the outlook is deteriorating amid Europe’s debt crisis.ETP Holdings
http://www.bloomberg.com/news/2012-06-28/gold-traders-extend-bullish-streak-on-debt-crisis-commodities.html
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