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April 22, 2013

Release Date: 
Tuesday, April 23, 2013

Gold prices rose more than $14 on the New York Spot Market in morning trading as demand for physical gold continued unabated. Silver prices were also higher. You can see the most current spot prices here.

“As the price moved over $1,400 U.S. dollars/ounce, physical traders, on the expectation that gold could possibly correct back higher, rushed into gold. Physical demand continues to be very strong and could push the price higher over the coming days,” MKS Group’s senior vice president told MarketWatch. (“Gold prices shoot up 2.2% as ‘shorts’ shrink,” MarketWatch 4/22/13.)

“Our physical flows to Asia have been particularly elevated this week.”  The president of the Hong Kong Gold & Silver Exchange Society said, “In terms of volume, I haven’t seen this gold rush for over 20 years… Older members who have been in the business for 50 years haven’t seen such a thing.” (“Asian bargain hunters pile into gold,” Financial Times, 4/22/13.)

Bloomberg reports that hedge funds increased their long positions in gold following last week’s selloff, indicating their belief that gold prices will move higher.  “Hedge funds increased bets on gold rallying after prices plunged the most in 33 years, underscoring billionaire John Paulson’s view that bullion will rebound. Fund managers and other speculators increased net-long positions in gold by 9.8 percent... Investors turned bullish on silver for the first time in three weeks. (“Hedge Fund Gold Wagers Defy Worst Slump in 33 Years: Commodities,” Bloomberg, 4/22/13.)

A majority of dealers, analysts, banks and traders surveyed by Kitco News see higher gold prices this week. In all, nearly 64% forecast higher prices while less than 15% see lower prices. (“Gold Survey: Survey Participants See Higher Gold Prices Next Week,” Forbes, 4/22/13.)

The Gulf News wrote an op/ed piece explaining why gold remains an integral part of Asian culture, appealing to more than two billion people. “Asians, particularly Indians, do not calculate the value of their gold assets on the basis of the daily changing prices. For them, gold’s store value also has an emotional component to it, bordering on obsession, and it is a symbol of wellbeing and security. Any price increase adds to the feel-good factor, but any fall in price is not a reason for despair, rather an opportunity to buy more. In fact, India’s gold imports this year are expected to increase 36 per cent by June this year ….” (“Two billion reasons to be bullish on gold,” Gulf News, 4/22/13.)

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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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