We will have a mirror site at http://nunezreport.wordpress.com in case we are censored, Please save the link

Friday, February 3, 2012

Gold keeps up rally after best January in 32 years






LONDON, Feb 1 (Reuters) - Gold rallied for a second day on Wednesday, supported by upbeat economic data from Germany and the United States, with the precious metal building on gains in January that marked its strongest year-opening month in 32 years.

Spot gold was up 0.4 percent at $1,744.15 an ounce at 1534 GMT, on course for a fifth straight week of gains.

It rose 11 percent in January, the largest one-month gain since August 2011 and the largest for the month of January since 1980, thanks to a combination of the weakness in the dollar from a Federal Reserve commitment to keep U.S. rates near zero and central bank purchases.

Evidence of Germany's economic health helped boost the euro, and gold by extension.

Market sentiment was also boosted by data showing the pace of growth in the U.S. manufacturing sector picked up in January to its highest level since June.



"If economic data comes in on the positive side and if the U.S. labour market report on Friday doesn't disappoint, then there is still upside potential for gold, but it depends on the recovery in the euro zone and Greece's debt rescheduling," said Peter Fertig, consultant at Quantitative Commodity Research.

The single European currency was expected to remain under pressure from concerns about Greece, however, even after its finance minister said talks with private creditors on a swap deal vital to avoid a chaotic default, were "one formal step away".

Analysts largely expected gold to rally this year, although many say that a pull-back in the near term looks likely.

"Buyers have returned to the euro, which is helping the situation in gold. It had a bit of lacklustre profit-taking yesterday but didn't break anything important on the downside, which helped confirm that being long is back in vogue," Ole Hansen, senior manager at Saxo Bank, said.

"The last two weeks have done a heck of a lot to confidence, and we've seen that attempted corrections have been short-lived, so the mood has definitely changed, but overall, we are overbought quite significantly ... so there will be some kind of consolidation."

The gold price has risen by nearly 15 percent since hitting six-month lows in late December.

Anecdotal evidence of robust Chinese demand over the Lunar New Year holiday last week, together with figures on holdings of the metal in exchange-traded funds and U.S. futures, have added to the perception that the investor mood towards gold has become more positive following December's sharp drop.

"Concerns about Greece and Portugal are keeping demand for gold high and supporting the price. Yesterday gold defied the downward trend in commodity prices and a firmer U.S. dollar, increasing to an eight-week high of $1,748 per troy ounce," Commerzbank analysts said in a note.

"There has still been no breakthrough in negotiations (on Greek debt) ... The sovereign debt crisis will thus continue to preoccupy the markets for some considerable time yet and should support the gold price," they said.

Gold priced in euros was trading at its highest in nearly six months, having also staged its biggest monthly rise in January since August, with a gain of 10 percent.

Holdings of metal in ETFs rose by over 650,000 ounces in January, marking the first month of net inflows in two months. December's outflows of nearly 1 million ounces coincided with the second-largest monthly drop in the gold price since the collapse of Lehman Brothers in late 2008.

Silver outpaced the rest of the precious metals complex, rising nearly 2 percent on the day to trade at $33.71 an ounce. The silver price rose by nearly 20 percent last month, in its largest monthly rally in nine months.

Platinum and palladium both rallied in line with firmness across the industrial commodities complex. An uptick in Chinese factory activity in January offered further support to raw materials prices.


Reuters




No comments:

Post a Comment