Gold prices appear to be stabilizing after melting for two
While many news outlets credited Janet Yellen for the boost,
strategists expect the meltdown to resume, after a seasonal
boost, owing to weak economic growth globally.
In New York futures trading, spot gold prices added 0.4% to
$1,289 an ounce Thursday.
SPDR Gold Shares (
), tracking a 10th of an ounce of bullion, rallied 1.2% to
124.26. It rebounded from previous lows from August and October
between 121 and 123 a share.
Market Vectors Gold Miners ETF (
) climbed 2.7% to 24.55.
Some market watchers said the bounce was driven by
short-covering after Federal Reserve Chair nominee Yellen's
dovish remarks to the U.S. Senate Banking Committee. Yellen said
the central bank has to stick with its bond-buying spree to stoke
economic growth and combat unemployment.
Although there's little doubt of her confirmation to replace
Ben Bernanke, Yellen's remarks have been very general and pretty
much a repeat of Bernanke's performances.
Seasonally, gold has entered its strongest months of the year,
from November through February, covering Christmas in the U.S.
and Europe, the Lunar New Year in Asia and Valentine's Day in the
"Seasonality and (negative) sentiment put the odds in favor of
a near-term bounce," Simon Maierhofer, founder of iSPYETF.com,
said in an email. He's buying gold futures at $1,281 an ounce
with a stop loss at $1,268 an ounce. That translates to putting a
stop loss at $121.70 a share for GLD.
Bill Strazzullo, chief market strategist at Bell Curve
Trading, believes gold will bounce to as much as $1,314 an ounce,
or 131 for GLD, before rolling over again to as low as $1,000 an
ounce. The gold and silver bulls assumed that joint central bank
stimulus programs around the world have failed to lift inflation
as intended, Strazzullo says.
"The major economies around the world are still in a
slow-growth, low-inflation mode despite years of very low
interest rates and trillions of dollars of quantitative easing,"
he said in an email. "The forces of deleveraging and deflation,
coming out of the last financial crisis, are still very
Demand For Bars, Coins
demand globally for gold bars and coins grew 6% year over year to
304 tons in the third quarter, according to the World Gold
Council's Gold Demand Trends report released Thursday. Most of
the growth came from Asia and the Middle East. Gold jewelry
demand rose 5% to 487 tons "as lower prices encourage shift to
Central banks, mainly in emerging markets, bought 93 tons in
the third quarter, increasing their total reserves by 300 tons
this year. It marked the 11th straight quarter of net buying.
Total third-quarter gold demand weighed in at 868.5 tons, down
12% year over year. In dollar terms, demand fell 37% year over
year to about $37 billion mainly because of heavy selling in
ETFs. Gold ETFs redeemed 119 tons in the third quarter, after
redeeming 402 tons in the second quarter and 177 tons in the
Global mine production rose 4% to 1,145 tons, while recycling