Tuesday, March 11, 2014

Gold Price "Vulnerable" If Ukraine Tensions Ease


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Gold price flat as Nato deploys Awacs to monitor Ukraine's borders...
 
GOLD PRICE gains of 12% in 2014 so far are increasingly dependent on continued tensions between Moscow and the West over the political turmoil in neighboring Ukraine, analysts say.
 
"Safe haven bids supported the gold price early last week in the light of Russia's military actions in Ukraine," writes Jonathan Butler at Japanese conglomerate Mitsubishi, "but later subsided."
 
"The spark we got from Ukraine took us to a spike," agrees Gary Dugan, private bank Coutts' chief investment officer for Asia and the Middle East, pointing to other "tension points around the world" including between China and Japan.
 
"Provided there is no escalation in the Ukraine crisis," adds Edel Tully at Swiss investment and London bullion bank UBS, "there's no urgency for fresh buyers to enter at current price."
 
Following Friday's stronger-than-expected US jobs data, "should geopolitical tensions ease, gold looks the most vulnerable to a correction across the precious metals complex," reckons Suki Cooper, precious metals analyst at London market maker Barclays.
 
Rather than jumping on Monday, however, the London gold price today ticked $5 higher from Friday afternoon's PM Gold Fix of $1335 per ounce – the highest Friday Fix in 23 weeks.
 
Nato meantime said it's deploying special Awacs reconnaissance jets in Poland and Romania to monitor activity along Ukraine's borders.
 
Hedge funds and other speculators trading gold futures and options last week raised their "net long" position (of bullish minus bearish bets) to the highest level since January 2013, according to new data released by US regulators late Friday.
 
Back then the gold price stood 25% higher at $1690 per ounce. Last week's data refer to Tuesday's close in US Comex futures and options, a day after the gold price rose sharply as Moscow's actions in Ukraine made headlines worldwide.
 
Calling speculative positioning "swollen", the net long has "increased 160% in just nine weeks," says Tully at UBS.
 
Over that time, however, since the end of 2013, gross spec longs have grown only 27%, while the number of bearish bets held by hedge funds and other speculators has more than halved.
 
Last week's rise in the spec net long came almost entirely from a sharp cut to bearish positions.


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