Ecuador court gives green light for Silvercorp, Salazar’s El Domo project
The ruling removes the last major obstacle for the $250 million project, located 150 km northeast of Guayaquil.
Bloomberg’s weekly survey of gold traders shows they are the most bullish since November 11 with 16 out of 23 predicting that the precious metal will gain this week.
Bloomberg data shows “investors increased their holdings in exchange-traded products (ETP) backed by bullion for seven consecutive weeks and now hold 2,407 metric tonne valued at $131 billion.”
Despite consistent investor interest due to global economic uncertainties and the availability of easy money leading to a loss of confidence in paper currencies, trading in the yellow metal has become more volatile. Gold ended the week at $1,715 an ounce level but bounced within a $40 range on Friday.
Within the space of a couple of hours gold plummeted to a low of $1,677/oz after a positive jobs report in the US signalled that historic low interest rates may end sooner than expected before shooting up again after a rumour circulated about a possible incident between Israel and Iran earlier in the day.
Wild swings up and and down have become more commonplace – after gold futures hit a record high above $1,900 an ounce in August the yellow metal fell precipitously two days after hitting the record, losing $105 or 5.6% in value in a single day.
In 2011 trading in gold was the most volatile since 1980, with the gap between the year’s highs and lows coming in at close to $600 an ounce or a 32% range. In 1980, when gold hit a record $850 an ounce, the spread was even greater at more than 40%.
1980s record was set after a spike in oil prices following the Iranian revolution. It took almost three decades for gold to breach the $850-level, which it did at the start of 2008. However, in inflation adjusted terms the 1980 price is still the highest ever – gold would have to hit some $2,400 an ounce to set a record in today’s money.
The Hindu Business Line reported on Saturday that some observers think that what is happening on the gold market is a healthy correction and that “buying on dips could be a good strategy:”
One of the most interesting features of the gold market in recent years is that whenever prices made sharp corrections, physical demand stepped in to support the market. It is likely to happen this time too.
