Gold Entering Traditionally Strong Period of November and December

Gold
Gold continues to consolidate above the $1,000 level.

Further price falls are quite possible in the short term as gold works off its short term overbought state. However, the primary driver of gold prices in recent months has been investment demand (especially institutional, hedge fund and central bank) and this demand is not going to disappear anytime soon – especially with increasing concerns regarding the outlook for fiat currencies. $1,200/oz to $1,300/oz remains a viable price target by year end.

October is nearly over and it is traditionally not the best month for gold, with short term correlation with equity markets often seen. September, November and December are traditionally stronger months for gold. Western holiday jewellery demand kicks in late in the year for Thanksgiving and Christmas, and, significantly Chinese New Year, which is increasingly important on the demand side at the end of the calendar year. These important demand factors normally result in gold's strongest performance in September and in the early winter months of November and December.

In EUR and GBP terms, gold is trading at €700/oz and £628/oz respectively and has remained strong in these currencies as the dollar has strengthened against falling euro and sterling.

Silver
Silver is currently trading at $16.31/oz, €11.09/oz and £9.92/oz. Silver as usual has fallen by more after rising by more. It is vulnerable to further correction but remains a strong buy for the medium and long term.

Platinum Group Metals
Platinum is trading at $1,317/oz and palladium is currently trading at $319/oz. Rhodium’s fundamentals are very interesting and various analysts are of the opinion that rhodium could rise to over $5000/oz in the coming months. It is worth remembering that rhodium was trading at $10,000/oz some months ago. It is now trading at $1,950/oz.

Disclosure: no positions

Comments

[Rakesh V:]

To,
Dear friend,

i would like to congratulate for your wonderful article and good speech since i dont have the talent like you.

But as far as Gold and Price are concerned, i belive that Gold can trade lower in the month of November and my support is US$971, and US$954, the guds to give call or anticiapatation about gold is very sure becuase whatever the prices are today or last week we have already forecasted and our target was US$1080, (ibma.org.in, Fundamental Report Section). now after that we have given selling call in gold and silver at US$1054 or high price upto Rs.1070, for downside target of US$1024, is good suppport in any downward trend, i would like to tell the world to remove the upside position in gold at higher price upto U$1052 because gold can go down heavily in next weeks,,,,, same with silver we have given sell call at US$18.36 for downside buy target of US$15.59, (ibma.org.in article).

Reason behind the bearishness in market are many but one major is lacking physical demand in india. India is biggest consumer in the world which account 20% of gold consumption and now the recent policy presented by 2009 budeget indicates more downward movement, if gold production is 2500 and india stop consumting the 700 tonne per year then automatic supply comes in market or addition of 400 tonnes, just becuae of higher import dury on gold Rs..200 10 gm and silver 520 per kg.

No doubt china and Russia are more impactfull country but both are producing good amount of GOLD in their own country with good purity so they dont need to buy from international market even they want they can by from IMF (if they sell) and Russia (will sell to domestic users). so the suppy is there but where is demand... Tell me any country like India, Turkey. etc .... China is buying on phobia of dollar fall but i belive dollar will stable very soon.

Just cross the finger and wait for US$954 in coming weeks and Rs.15095 are price i am looking for in coming days.

Oct 30 02:55 AM

[YaHozna:]

Chances are indeed gold will "surprise" to the upside since even many goldbugs are sceptic about it to happen.

With Obama, Bernanke and Geithner providing huge amounts of funny money, wich will enter the economy next year because of gained faith and policies to enhance the feeling, both the stock market may go up and gold may go up. A lot.

Oct 30 03:27 AM

[LaChic:]

Gold will trade higher with the market...that is just the way it is.

Oct 30 08:06 AM

[sorgmot:]

Obama, Bernanke, and Geithner are the 3 blind mice in the midst of USA financial collapse and chaos looking for clock to run up until the clock strikes nine so they down pulling the their bad ideas behind them.

Compare the countries that are prospering to the USA. They are Brazil, China, India, Australia, Indonesia, and those in Eastern Europe, and those in the Middle East.

Look for demographic differences particularly age profiles.
Look at their cost of government per non government citizen.
Look for monopolies and cartels in their businesses.

Oct 30 10:24 AM

[twitee:]

In case you are wondering, India has nothing to do with the price of Gold. The recent (last 5 years) Gold price increases are based on unstable US economy and endless printing of the dollar due to corruption at core of the corrupted/unregulated financial system.

Oct 30 03:56 PM