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Analysts Expect Higher Gold Prices Next Week

Release Date: 
Friday, December 21, 2012

The price of gold rose today as data from the International Monetary Fund showed considerable gold purchasing by central banks.  Gold was $8.80 higher at 8:22 a.m. Pacific Time on the New York Spot Market, trading at $1,656.00 per ounce.  Spot silver was 0.18 higher at $30.20 per ounce.  (Click here for the most current spot prices.)

A number of nations increased their gold reserves for a third consecutive month in November including South Korea, Brazil and Russia. During the third quarter, central-bank purchases accounted for about 9% of global gold demand, according to the World Gold Council (WGC).  Central banks bought 373.9 tons of gold in the first nine months of the year and full-year additions will probably be at the bottom end of a range from 450 to 500 tons, the WGC said.

“Central banks, particularly in the emerging economies, are looking to increase the proportion of gold in their reserve assets,” she noted. “That will drive prices of gold because they can be quite significant purchases.”

A survey by Kitco shows a majority of participants expect gold prices to rise next week and expect fundamentals to support gold next year. “[M]any said that they are looking ahead into next year already for when markets revert back to trading their underlying fundamentals, such as ultra-loose monetary policy from most of the world’s central banks.”

(Sources:  “Brazil Doubles Gold Reserves as Central Banks Buy Bullion,” Bloomberg, December 21, 2012; “UPDATE 3-Iraq adds to gold reserve, 1st time in years -IMF data,” Reuters, December 21, 2012; “Comex Gold Ticks Higher After Three-Month Low,” Wall Street Journal, December 21, 2012; Higher Prices For Gold Expected Next Week – Survey Participants.” Kitco, December 21, 2012)

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†This material has been prepared for private use. Although the information in this commentary has been obtained from sources believed to be reliable, Goldline does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice.

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