Thursday, 25 June 2009

Gold gains - Now bullish talk

Gold Gains on Speculation Low Interest Rates Will Spur Demand

Today’s unemployment report is “just a reminder that the labor market is still in serious trouble,” said Ryan Sweet, an economist at Moody’s in West Chester, Pennsylvania.

“The poorer-than-expected initial jobless claims support precious metals,” Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, said by e- mail.

Jobless rates “represent one of the principal ‘green shoots’ that observers have placed so much emphasis upon during the current year,” Jon Nadler, an analyst at Kitco Metals Inc. in Montreal, said today in a note. “The Fed is cognizant of not only the fragile state of the green shoots, but also of the dangers that inflation could present if too much time elapses before the interest-rate trigger is finally pulled.”

Still ‘Bullish’

Barclays Capital Plc’s technical analysts, including New York-based Jordan Kotick and London-based Phil Roberts, said in a report today that they are “bullish” on gold in the “medium term,” adding that a “secular uptrend points to further gains to $1,033-$1,200” an ounce. Gold reached a record $1,033.90 on March 17, 2008.
The metal rose to $937.25 in the afternoon “fixing” in London, the price used by some mining companies to sell their output, from $934.25 this morning.

China should buy gold rather than U.S. debt because the Fed’s policies make dollar depreciation inevitable, Li Lianzhong, a senior Communist Party official, told a conference in Beijing today, Market News reported. China’s reserves rose 76 percent in six years to 1,054 metric tons by April, Hu Xiaolian, the head of the State Administration of Foreign Exchange, said on April 24.

The comments “add further support to the long-term outlook for gold,” James Moore, an analyst at in London, said in a note. “Coupled with the Fed’s ongoing quantitative easing policy and the inflationary pressures this will create, we believe gold will remain supported.”

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