Gold bullish outlook 2012 anticipates further strength in the U.S. dollar going into the New Year may be the next test for the yellow metal. Unlike previous periods of risk aversion that occurred in 2009 and 2010, this time U.S. dollar strength is not being accompanied by strong inflows into physically backed gold ETFs, said Deutsche Bank in its final weekly commodities report of 2011.
According to bank, liquidation in Comex Gold over the past couple of months appears to be drawing to a close, although currency trends could trigger yet another round of speculative liquidation. Overall, gold has outperformed other precious metals in recent months.
Looking ahead, Deutsche Bank wrote: “We expect the conditions that have driven gold returns higher over the past 11 years will persist into 2012, namely negative real interest rates, a high U.S. equity risk premium and central-bank buying.”
The bank is forecasting $1,750 gold in the first quarter of 2012, $1,850 in the second quarter, then $2,000 in the third and fourth quarters.
Spot gold dealings had lost nearly $38 on Thursday and closed near their lows for the day, threatening to breach the $1,700 price support. This morning's near $10 opening advance to $1,715 per ounce represented perhaps in part a response (and a small one at that) to the EU's fiscal accord but more likely a minor corrective bounce in a market that still has the euro trading at $1.33 and the US dollar unwilling to roll over and fall on a sword. One would have expected a truly grand celebration ($75 or more) in the yellow metal's trading space on the back of the "be-all end-all" agreement that was cobbled together in Marseille.
According to bank, liquidation in Comex Gold over the past couple of months appears to be drawing to a close, although currency trends could trigger yet another round of speculative liquidation. Overall, gold has outperformed other precious metals in recent months.
Looking ahead, Deutsche Bank wrote: “We expect the conditions that have driven gold returns higher over the past 11 years will persist into 2012, namely negative real interest rates, a high U.S. equity risk premium and central-bank buying.”
The bank is forecasting $1,750 gold in the first quarter of 2012, $1,850 in the second quarter, then $2,000 in the third and fourth quarters.
Spot gold dealings had lost nearly $38 on Thursday and closed near their lows for the day, threatening to breach the $1,700 price support. This morning's near $10 opening advance to $1,715 per ounce represented perhaps in part a response (and a small one at that) to the EU's fiscal accord but more likely a minor corrective bounce in a market that still has the euro trading at $1.33 and the US dollar unwilling to roll over and fall on a sword. One would have expected a truly grand celebration ($75 or more) in the yellow metal's trading space on the back of the "be-all end-all" agreement that was cobbled together in Marseille.
Rally for gold price came as investors turned more optimistic about Europe’s plan to recapitalize banks, said Tom Pawlicki, a metals analyst with MF Global in Chicago.
The hopes Europe will be able to keep its sovereign-debt woes under control grew as European Commission President Jose Manuel Barroso on Wednesday outlined the plan.
Gold had tanked in recent weeks as the euro zone’s sovereign-debt concerns grew so intense investors dumped the metal to raise cash and make good on their bets in other investments.
Gold ended lower Tuesday as investors were sidelined ahead of a key vote about Europe’s bailout fund. After gold’s floor trading closed, Slovakia rejected a plan to enhance power of the fund, disrupting attempts to keep the crisis contained.
Another ray of hope for gold came from recent data from the U.S. Commodity Futures Trading Commission. Data Friday showed fund managers have started to modestly move back to gold.
“(Money managers) are buying again,” and numbers, however modest, could foretell a shift in sentiment for gold, Pawlicki said.
CFTC data released late Friday showed managers’s net-long positions, or bets gold will go higher, increasing by more than 5,000. That was only the second increase of net longs in nine weeks, Pawlicki said.
Amid the recent volatility in gold, fund managers liquidated more than 100,000 net-long positions, so the increase is “a drop in a bucket” but a step in the right direction, he added.
Other metals tracked gold higher, with December silver SI1Z +2.41% rising 71 cents, or 2.2%, to $32.71 an ounce. Copper for the same month’s delivery HG1Z +3.01% rose 11 cents, or 3.3%, to $3.40 a pound.
Meanwhile, the dollar index DXY -0.88% , which compares the greenback against a basket of six currencies, fell to 76.951 from 77.549 late Tuesday.
A lower dollar generally helps gold and other commodities as it lowers their price for holders of other currencies, broadening their investment appeal.
Gold for December delivery GC1Z +1.20% added $20.50, or 1.2%, to $1,681.40 an ounce on the Comex division of the New York Mercantile Exchange. It had earlier traded as high as $1,693.90 an ounce and as low as $1,662 an ounce.
The hopes Europe will be able to keep its sovereign-debt woes under control grew as European Commission President Jose Manuel Barroso on Wednesday outlined the plan.
Gold had tanked in recent weeks as the euro zone’s sovereign-debt concerns grew so intense investors dumped the metal to raise cash and make good on their bets in other investments.
Gold ended lower Tuesday as investors were sidelined ahead of a key vote about Europe’s bailout fund. After gold’s floor trading closed, Slovakia rejected a plan to enhance power of the fund, disrupting attempts to keep the crisis contained.
Another ray of hope for gold came from recent data from the U.S. Commodity Futures Trading Commission. Data Friday showed fund managers have started to modestly move back to gold.
“(Money managers) are buying again,” and numbers, however modest, could foretell a shift in sentiment for gold, Pawlicki said.
CFTC data released late Friday showed managers’s net-long positions, or bets gold will go higher, increasing by more than 5,000. That was only the second increase of net longs in nine weeks, Pawlicki said.
Amid the recent volatility in gold, fund managers liquidated more than 100,000 net-long positions, so the increase is “a drop in a bucket” but a step in the right direction, he added.
Other metals tracked gold higher, with December silver SI1Z +2.41% rising 71 cents, or 2.2%, to $32.71 an ounce. Copper for the same month’s delivery HG1Z +3.01% rose 11 cents, or 3.3%, to $3.40 a pound.
Meanwhile, the dollar index DXY -0.88% , which compares the greenback against a basket of six currencies, fell to 76.951 from 77.549 late Tuesday.
A lower dollar generally helps gold and other commodities as it lowers their price for holders of other currencies, broadening their investment appeal.
Gold for December delivery GC1Z +1.20% added $20.50, or 1.2%, to $1,681.40 an ounce on the Comex division of the New York Mercantile Exchange. It had earlier traded as high as $1,693.90 an ounce and as low as $1,662 an ounce.
