For the month, the falls yesterday led to gold being 0.4% lower in dollar terms in January. It was also lower in euro terms but eked out strong gains against the pound and Japanese yen both of which saw falls on international markets.
On the week, while gold is lower today it looks set for a small weekly rise in dollar terms and by more in other currencies. It is currently 0.45% higher in dollar terms and 0.35% higher in sterling terms but has seen stronger gains in other paper currencies – 1.1% higher in euro terms, 1.9% higher in yen terms and 2% higher in Swiss franc terms.
While the euro has strengthened against the dollar and pushed the dollar index to its lowest level since the end of December – both currencies look vulnerable to further falls against gold in 2013.
A higher close this week may help the negative technical and overall sentiment towards gold due to the recent price weakness.
U.S. nonfarm payrolls are published at 1330 GMT and a negative number should see more safe haven gold buying as was seen after the poor GDP number this week.
The CME Group said it will add platinum and palladium options onto its Globex electronic platform starting towards the end of February. They intend to cater for the increasing investor interest in platinum group metals.
New research confirms that having gold in a portfolio acts as a currency hedge and will protect investors from currency volatility in emerging markets.
The World Gold Council, examined eight periods of “crisis conditions” and found returns from portfolios that included gold in hedging were 2.4% higher than investments lacking measures to counter exchange-rate risk. Gold beat currency hedges by 1%, according to the Council.
Economic growth in emerging markets, along with “aggressive” monetary policies in developed countries, led to increases in interest-rates disparities and more expensive exchange-rate hedging costs, they noted.
The World Gold Council has long been at the forefront of providing excellent research showing gold’s importance as a hedge, diversification and store of wealth for investors and savers.
JPMorgan Sees Gold At $1,800 By id 2013 As South Africa “In Crisis” And “Escalating Instability” In Middle East
J.P. Morgan Chase & Co. said gold will rise to $1,800 an ounce by the middle of 2013, with the mining industry in South Africa “in crisis,” according to Bloomberg.
South Africa, once the largest gold producer, faces industrial unrest, high wage inflation and adverse regulatory changes for local mines, Allan Cooke, an analyst at the bank, said in a report dated today.
Gold will get a boost from prospects of more stimuli from the U.S., Japan and Europe, the potential for escalating instability in the Middle East and low interest rates, according to the report.
Geopolitical risk from the Middle East and the risk of war between Israel and Syria and Iran remains seriously underestimated by market participants and will provide support for both oil and gold.
Only yesterday the crisis intensified after Israel stepped into the Syrian conflict by bombing the outskirts of Damascus. Russia condemned the attack and Syria has threatened retaliation.
*Post courtesy of Mark O’Byrne at Gold Core – February 1, 2013