TECHNICAL banking reasons and a general optimism is behind the improvement in the gold price this week, particularly as Indian buyers move into the market ahead of the country’s wedding season.
However, an added spur to the gold price is the possibility of a significant gold buy-back by an, as yet, unnamed gold producer, market analysts have said.
The spot price of gold rose to six week highs on September 6 above $685/oz, with this year’s highs above $693/oz seen as the next target. Gold is currently trading at $693/oz in mid-morning, Johannesburg.
“The market is buzzing in London,” said Jessica Cross, CEO of metals consultancy, VM Group. “The [gold] exchange traded funds took in 10 tonnes, so that has been very buoyant together with rumours of a big producer buy-back we’re trying to get to the bottom of at the moment,” Cross said. She was speaking on Classic Business, a radio programme broadcast on week nights in South Africa.
“A major gold producer is sufficiently optimistic on the future price of gold that it is prepared to become a buyer rather than a seller of gold,” said Ross Norman, an analyst for TheBullionDesk.com. “Even at these relatively elevated levels.”
“It has prompted a move higher in the spot price of gold that has breached a number of technical levels and put gold back on to the radar of so-called black-box traders,” Norman said.
Cross said from a broader perspective, the market was looking better for gold. “Comex long positions have come down,” she said.
“There were 527 tonnes on July 24 and they’re down 328 tonnes last week. So that is very interesting, but we expect those longs now to begin increasing as we’ve gone up into this rally.”
“It really remains now to be seen how the physical responds. There’s been talk of strong physical demand particularly today given tensions with the sort of story about Israel and Syria,” Cross said.
Reports that Israeli warplanes bombed unidentified Syrian targets triggered a fresh wave of safe-haven buying on September 6, said TheBullionDesk.com.
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