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Gold Traders Overwhelmingly Bullish

Release Date: 
Friday, December 28, 2012

The price of gold edged lower on stronger weekly unemployment data from the Labor Department, although the yellow metal is on track for a 12th consecutive annual gain this year, having increased more than 6 percent during 2012. Gold was $4.60 lower at 7:01 a.m. Pacific Time on the New York Spot Market, trading at $1,659.30 per ounce.  Spot silver was 0.15 lower at $30.09 per ounce.  (Click here for the most current spot prices.)

Gold traders are the most bullish in four months, according to a Bloomberg survey.  Fifteen of 19 analysts surveyed expect prices to rise next week.

Peter Fertig, analyst with Quantitative Commodity Research, commented on the imminent deadline for reaching a budgetary agreement to avoid the fiscal cliff.  “Now it is looking like the U.S. economy might head to a fiscal cliff…if there is no agreement, and people don't know what is happening with the economy, the safe haven status of gold could re-emerge," he said.  Fertig noted that if the politicians manage to reach a timely agreement, “gold will go up” along with other assets.

Colin O’Shea, head of commodities at Hermes Investment Management Ltd. in London, which manages about $2.3 billion of raw-material assets, said “a resolution of the fiscal cliff in some form could provide a short-term impact on the market.  We may see increased inflation going forward which will bode well for commodities.”

“The problems we’ve seen over the last year haven’t disappeared,” said Thorsten Proettel, a commodities analyst at Landesbank Baden Wuerttemberg in Stuttgart. “There is still lots of potential for trouble in the world and that is a good reason for people to stay in gold or buy more.”

(Sources: “Gold Bulls Strongest Since August as Funds Retreat: Commodities,” Bloomberg, December 28, 2012; “Gold futures ease ahead of fiscal-cliff talks,” Marketwatch, December 28, 2012; “PRECIOUS-Gold dips, but heads for weekly gain,” Reuters, December 28, 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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