On Thursday, the gold price continued to pare recent gains as global equity markets recovered and economic news out of the US buoyed the dollar.
In late afternoon dealings in New York, gold futures with December delivery dates lost $2.80 or 0.2% to $1,121.80 an ounce in another day of brisk trading.
Gold has now lost 3.2% since Friday after four straight days of declines.
The better than expected GDP numbers in the US put a September Fed rate hike back on the table, which diminishes gold allure for investors as the metal is not income producing.
Gold is still well above the more than five-year closing low of $1,084 struck August 5 but the safe haven buying amid the panic on markets did not materialize to the extent many bulls had hoped.
Georgette Boele of ABN Amro in a Thursday research note argues that gold did not enjoy a stronger rally because the weaker Chinese economic outlook “outweighed safe have demand.”
Boele also believes gold’s safe haven status had been eroding over the course of many years:
“The gold market has dramatically changed with the arrival of gold products that opened the market to a wider public. Gold is not only bought as a protection for uncertain times but also for speculation purposes.
“At the height of the global liquidity crisis (when there was a shortage of liquidity) gold prices dropped sharply because investors valued cash more than gold.
“This suggests that at times of severe crises, gold could not live up to its safe-haven status. The variation in the gold price has coincided with a buildup and liquidation of outstanding investor positions in gold.
“This is not a positive development for a safe-haven asset, because significant investor activity could indicate that it is used for speculation rather than as a safe haven.”
Source: ABN Amro
The bank’s house view is a gold price of $1,000 an ounce by the end of the year, weakening to $800 an ounce at the end of 2016.
8 Comments
George Allan Bloom
REALLY??? i did not get the memo, mssr els. Is there a chance that it still could be and your headline is wrong? what are the probabilities
chris baus
Well, there are other reports which do not support this motion. Why this is the right one?
You once listed in January 2014,10 predictions for gold price at the end of 2014. They were from 800 to 1400 an oz. You commented, that if one took average it would give what it was now (Jan 2014). I think this comment of yours sums it all best.These experts believe but do not know. That the simple truth.
renevers
Boels of ABN Amro makes the error of judging the happenings around the price of gold to be under normal demand and price rules. Peter Schiff from Schiffgold however, sees in the odd price drops created with “papergold” from people and organizations, a manipulation of trying to get the gold-price down. Not a plunge protection team as in the stock-markets but a “gold hike”protection team to protect the image of the dollar. With so much money printing , the USA nears Mexican circumstances and money printing habits there are other considerations than market equilibrium. These are political and strategical. So , when there is an US Pe$o in stead of some harder currency, why would the general population favor inflated worthless money over traditional unprintable physical gold? They will not, the shells will fall from their eyes when even the intensive state driven pro dollar $ propaganda, that we seen now, fails . In some time more people will recognize the irreversible inflation of money on the FED balance that can not be recalled, as the loans to the government are “unperforming” . These can only be monetized with permanent higher levels of dollars in circulation. That drives the worth of personal savings to zero. If you can’t save in money , you will try it in gold and silver, as a citizen. Even small capital holders will choose some gold for his daily working capital. There is just one risk that hangs over the gold markets: gold confiscation at the end of the dollar plunge, by the state. A kind of Rooseveld gold “theft” , like in the 1930-thies, when ownership of physical gold by Americans became forbidden and had to be declared to the authorities. You just got some paper “gold rights” after that. In fact that acted as a kind of tax (75%) on your gold possessions until the time that you could your gold back as security investment.
But you could avoid, that by keeping your gold secret, or have it stored in safe countries OUTSIDE the banking sector. Doug Casey explained that in “international man”, a free newsletter .
renevers
Here some article in German about gold manipulation.
http://info.kopp-verlag.de/hintergruende/deutschland/markus-gaertner/gelbe-kriminalitaet-wird-am-gold-markt-die-groesste-gaunerei-der-geschichte-gelueftet-.html
Robert in Vancouver
There have been numerous major events over the past 2 years that should have driven gold up a lot higher, but didn’t.
20 years ago, any one of those events would have driven gold higher, but not any more.
I will continue to own gold and silver bars as insurance and hope I’ll never need to sell them. But I will never buy gold or gold miners as investments again.
rayban
Peter is much smarter than the average . I think he is right more than average types are right .
The problem now is perhaps the number and seriousness of the problems . Folks are numb from all the trouble . They get comfortable with the disasters and are not much concerned . Capitulating to the mass flow of serious issues and bad trouble . Personally I am buying .
chris baus
The point of the article may be valid. With the central banks in major economies pumping money in their trillions, the appetite for risk is greater as the punishment is diminishing (or like China’s reaction to declining stocks indicates, even disappearing) and therefore the escape to gold is declining. This also would explain this clear decouple of stocks from real economy and becoming more a game than based on fundamentals. It may also indicate that the rising of interests would start bringing all again into check and more demand for protection aginst risk should resurface. This should benefit gold.
Swiss Freiherr
The ABN AMRO, ha ha ha. A bank owned by the State. I can’t take those civil servants serious.