AM fix was USD 1,718.00, EUR 1,321.54, and GBP 1,065.89 per ounce.
Yesterday’s AM fix was USD 1,713.50, EUR 1,322.66, and GBP 1,067.07 per
trading at $32.78/oz, €24.93/oz and £20.12/oz. Platinum is trading at $1,578.75/oz, palladium at $604.75/oz and
rhodium at $1,070/oz.
Gold edged up
$0.50 or 0.06% yesterday and closed at $1,709.50. Silver hit a high of
$32.118 and pulled back but still finished with a gain of 0.05%.
Cross Currency Table – (Bloomberg)
Gold inched up
on Wednesday but traders remain cautious ahead of the nonfarm payrolls report
and the imminent US presidential election.
devastation of Hurricane Sandy will be a further blow to the already fragile
U.S. economy. The destruction of property and vital infrastructure - two of
the vital components in the wealth of a nation is negative for the economy.
The last thing the over indebted families and close to default U.S.
government needs are more very expensive reconstruction works. Reconstruction
and 'stimulus' has to be paid for either by the tax payer in the form of
taxes or a further increase in the money supply and inflation.
Event risk is
high with the aforementioned issues including a change of power in China and
multiple policy meetings at various central banks.
September eurozone unemployment figures released
were 11.6% up from 11.5% in August.
The US fiscal
cliff involving steep government spending cuts and tax hikes looms in January
and is likely to support gold at these levels and lead to higher gold prices
in the coming weeks.
South Africa’s mining industry continues. The police fired tear gas and
rubber bullets on strikers and protesters at top platinum producer Amplats today.
Times had an interesting article that suggested that Mitt Romney is a "threat
to the gold price" (see news) and quoted an executive in a jewellery group who said that “if Obama gets
re-elected gold is going to go through the roof.”
The truth is
that, gold is likely to go much higher in the course of the 45th President's
4 year term - whether there is a President Obama or a President Romney.
suggested that gold investors would vote for Mitt Romney due to concerns
about "potential" currency debasement and the US government’s
indebtedness and that the Republican Party’s rhetoric of deficit
reduction appeals to them:
Gold Spot $/oz, 20 Days – 30 Minutes
therefore ironic that the single greatest risk to gold at the moment is
probably a Romney victory in next Tuesday’s presidential elections.
by Romney is generally seen by investors as a downside risk for gold,”
says Joni Teves of UBS. “Nobody wants to do
anything until the elections are out of the way.”
A surprise win
by Romney could lead to very short term gold weakness but the scale of the
fiscal and monetary challenges facing the White House and Federal Reserve
mean that the down side risk is short term and limited and investors should
continue to fade the noise and focus on the long term diversification
benefits of gold.
supports the case. As James Steel of HSBC notes, gold’s most dramatic
rallies – in 1980 and 2011 – have occurred with Democrats in the
White House (Jimmy Carter and Barack Obama). And if Mr
Romney can succeed in bringing down the deficit, that
could lead to a stronger dollar and therefore weaker gold.”
supports the case somewhat. It is important to point out that gold rose for
the 8 years of George Bush’s Republican Presidency. Many gold buyers
would be concerned that Republican rhetoric regarding deficits is just that -
real “Romney risk” for the yellow metal has nothing to do with
fiscal policy. Instead, traders and investors are focusing on the likelihood
that if Mr Romney wins the November 6 election, he
would replace Ben Bernanke with a more hawkish chairman of the Federal
Reserve when the latter’s term expires in January 2014.
If that means
a change in direction from the Fed’s current experimental and
super-accommodative monetary policy, gold could suffer. Recall the sharp
sell-offs earlier this year when expectations of quantitative easing were
Gold Spot $/oz, 01 November 2010-31 October
2012 – (Bloomberg)
Gold will not
suffer when there is a change and a move away from ultra, ultra loose
monetary policies. As was seen in 1980, gold’s secular bull market is
likely to end if the Federal Reserve again achieves positive real interest
As was seen in
1980, gold will only fall towards the end of the interest rate tightening
cycle - this could take many years.
an Obama victory may be the green flag gold bulls have been waiting
The 45th U.S.
President is less relevant to the gold price than the wider global monetary,
macroeconomic, systemic and geopolitical fundamentals - all of which remain
extremely positive for gold.