Gold stocks are up almost 2 percent as of Friday, mainly due to the newly revealed weaker-than-expected U.S. retail sales data. In the time of economic uncertainty, with unemployment rates going up, and real estate value going down, such turn of events is anything but surprising. Those who found the U.S. retail sales data unexpectedly low are much greater optimists than they like to admit publicly, and perhaps, even privately.
After the fateful announcement on Thursday prices of all precious metals rapidly gained ground, palladium gaining approximately 6 percent, platinum nearly 5 percent, silver close to 3 percent, and gold’s price rising by almost 2 percent.
Reuters UK reports that spot gold rose to $754.10/755.30 an ounce from $739.60/741.20 an ounce late in New York. Earlier it rallied more than 2 percent to a session high of $757.90. Philip Carlsson, global products manager at Saxo Bank stated that “Today the slightly weaker U.S. dollar is supporting the gold market.” Gold and U.S. dollar move in the opposite directions throughout history, since whenever economy is allowed to be degraded to questionable state, buyers strive to acquire gold as hedge assets.
Philip Carlsson, however, does not quite share the optimistic outlook held by some professionals in regards to gold’s ability to once again reach the all-time-highs of costing over a thousand an ounce. “There is some support around the $750 level. However, I see no evidence that the downtrend in the gold market has come to an end. The outlook for a stronger U.S. dollar will keep the pressure going.” His expert opinion is shared by senior Commerzbank trader Michael Kempinski, who is quoted as saying that “Physical demand increased again around the $750 levels, but a lot of customers expect a bigger (price) drop in the future. Some customers are looking for $700.”
In the midst of gold stock’s continuous controversy, demand for gold jewelry; gold bars; and coins remains consistently strong. Those wishing to sell gold are cautious, the situation of those looking to buy gold, is significantly more precarious. Not quite a tie. Definitely not a stalemate. Lots of nervous people, though. Just another day. Business as usual.