Gold prices could end the year at more than 15% higher – their biggest annual increase in nine years.
“Gold has seen considerable safe haven buying from investors concerned [over] low and negative yields in the bond market and fearing a possible downturn in equities,” said George Milling-Stanley, chief gold strategist at State Street Global Advisors. Gold exchange-traded funds have also been “feeling the benefit of strategic asset allocation type buying by institutions and individuals.”
The gold price increased Wednesday with a deadline for an additional round of U.S. tariffs on Chinese imports approaching. There is no so-called ‘phase-one’ deal in sight, and a U.S. central bank policy meeting could provide an outlook for 2020, causing either an increase or decrease in the price of gold.
Gold prices declined Monday with investors turning to other asset classes after reports of an expanding Chinese factory sector and a rising dollar reduced demand.
Spot gold fell 0.3% at $1,459.94 per ounce at 0645 GMT. Prices had earlier reached highs dating back to Nov. 22. U.S. gold futures declined 0/5% to $1,466.
An expansion in factory activity during November in China, which ranks as the world’s second largest economy and biggest consumer of gold, led investors into equity markets.
Gold prices have had quite the struggle over the past five years as the global economy has slowly recovered from the financial crisis of the late 2000s. The precious metal has posted annual losses three years in a row now, with 2015 seeing a 12% loss alone.
So as 2016 begins to take shape and investors take a look at what’s worth a buy, are we looking at a fourth year of losses? The answer is most likely.
Overnight someone sold 1.2 million ounces of gold and it brought the price of gold down $12. That’s about a billion dollar trade. Here’s the chart showing the liquidation. As ZeroHedge writes,
For the 5th day in a row, “someone” has decided that 0030ET would be an appropriate time(assuming the ‘seller’ is an investor who prefers best execution rather than the standard non-economically-rational share-repurchaser in America) to be dumping large amounts of precious metals positions via the futures market. Tonight, with over 13,000 contracts being flushed through Gold – amounting to over $1.5 billion notional, gold prices tumbled $20 to $1151 (its lowest level since April 2010). Silver is well through $16 and back at Feb 2010 lows. The USDollar is also surging.
The mainstream is alit with stories covering gold and silver now that each has fallen through any semblance of resistance. CNBC is leading the charge, having published six stories in the 24 hours preceding 4:30pm PST on Tuesday. The six stories are as follows:
On Friday the US Mint announced it would stop rationing its popular American Silver Eagle bullion coins due to falling investment demand.
The Mint began rationing the American Silver Eagles last year due to sustained demand but recently told its authorized dealers they could buy as many Silver Eagles as they wish starting Monday.
The US Mint has been rationing coin sales to its authorized dealers since late January, 2013 following a suspension due to unprecedented demand, which depleted silver coin blanks.
All markets are rigged. But this is the story of one market in particular – the gold market. For a long time the price of gold has been fixed in London, and increasingly people are starting to question this process.
In its article “Banks Sued On Claims Of Fixing Price Of Gold” The New York Times highlighted the gold price suppression case. Traders and activists have been crying foul for years regarding the price of gold, arguing that it is rigged like energy prices have been by companies such as Enron and JP Morgan, and LIBOR. At the beginning of this week, on Monday, these arguments got a new audience: a federal court.