Coins sales strong, long bets rising, and ETF outflows cooling
In a holiday-shortened trading day in the U.S., gold held steady after hitting six-week highs just under $1,260, buoyed by a sense of increasing confidence in the yellow metal's prospects for 2014.Gold reached its highest level since December, touching $1,259, while silver traded evenly near $20.26. Platinum, meanwhile, hit three-month highs above $1,469 a strikes threaten mine production in South Africa.
Physical demand remains strong. The U.S. Mint sold 83,500 ounces of gold American Eagle coins so far in January, heading for the biggest monthly total since April, data from the mint show. The Mint also announced it was rationing sales of its hot-selling silver American Eagles to begin "slowly building weekly inventories."
Bullish bets placed in ETFs, futures
On the ETF front, holdings in the GLD, the world's largest gold-backed ETF, rose 7.49 tonnes to 797.05 tonnes on Friday, its first increase in a month.
Moreover, hedge funds raised bullish gold wagers to the highest in eight weeks, with the net-long position in gold climbed 7.6% to 43,277 futures and options in the week ended Jan. 14, Commodity Futures Trading Commissiondata show. Long wagers rose 4.8%, outpacing the 2.9% gain in short bets.
"Since the start of the year there has been a slight change in attitude towards gold and you can see that with the CFTC positioning or a sharp slowdown in ETF (exchange-traded fund) outflows over the past month," Citi analyst David Wilson said. "That's because the U.S. Fed tapering has been priced in by now."
"A modest build in speculative positioning, an increase in ETP holdings, and a strong start to coin sales implies investor appetite may be less of a drag on prices and in turn is a key area to watch," wrote Barclays analysts Monday.
"A floor has been put in" above $1,200
And Trading Advantage strategist Scott Bauer told Fox Business: "I'm actually seeing out here a lot of speculation to the upside. Traders really thinking that a floor has been put in. At least a temporary floor ... certainly down about that $1,210, $1,220 level. So the mentality out on the floor really is that there's probably a much better chance of a 10% to 15% upside to gold than there is to the downside, which is actually quite different from just three, four weeks ago."
And Mineweb's Lawrence Williams also wondered whether sentiment is changing within the gold sphere:
"One doesn't know yet if it's just stale bulls clutching at straws or if something else is afoot, but there certainly seems to be a renewed confidence in the precious metals markets arising during the opening weeks of the current year -- an element that was mostly lacking throughout 2013.
"Friday saw reports of big gold and silver flows into the major precious metals exchange traded funds; by all accounts Chinese gold demand remains extremely strong -- indeed gold movements through the Shanghai Gold Exchange are running at near record levels -- and gold and silver related stock indices are showing signs of revival. Whether this is a real sea change, or just another false dawn, remains to be seen. ...
So is gold going to take off again? Undoubtedly! But the timing of such a move remains obscure. This year, next year, sometime? Those who have an interest in the gold price remaining weak still have ammunition left, but it may be beginning to run low at last. Even so, as we've pointed out that although the overall gold price trend may start to move upwards this may not be achieved without some quite serious volatility both up and down. Gold seems, at the moment, to be struggling to break out upwards without counter moves coming in to bring it back down again so do not necessarily expect this situation to change much soon unless there is a major breakout taking it back above $1,300 or higher."
More information can be found online at http://www.goldbullionadvisors.com
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