Safe Havens In Demand Again

  • Posted Friday, July 11, 2014 at 08:28 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Gold and Silver prices were mixed on Friday with Gold currently steady at $1,337.00 an ounce after demand picked up in overnight trade on the Shanghai Gold Exchange (SGE) while Silver eased a bit to $21.41 an ounce in choppy trade. “Once Shanghai opened, the spot price put on a few dollars as SGE demand was surprisingly good,” said MKS (Switzerland) SA.

“Typically the Chinese market comprises more value buyers, meaning physical stocks get purchased when the price dips and vice-versa, so it was interesting to see the SGE premium out to $1 over London, compared to around a $1-$2 discount yesterday.” HSBC sees further gains ahead in Gold, calling the recent rally more than just a spike higher in thin trade. “There is also a geopolitical dimension to Gold’s gains we believe,” said the bank.

"For many investors, it is safe havens that are currently in demand," says Peter Fertig, of Quantitative Commodity Research. "Investors have discovered Gold again as an asset class that could provide some protection, after last year they clearly preferred the stock markets and risky assets." Although Gold had a breakout earlier this week, the RSI (relative strength index readings) is currently overbought, so it may take some time to consolidate the gains following the rally, said Colin Cieszynski, of CMC Markets.

"Growing concerns about the European banking sector and (Federal Reserve) Chair (Janet) Yellen’s testimony to Congress, which is likely to … come off as dovish, may keep a floor under Gold at a higher level in the near term,” Cieszynski added.

Meanwhile, the London Bullion Market Association (LBMA) announced on Friday that CME Group/Thomson Reuters has been selected to administer the London Silver Price fix, after the London Silver Market Fixing Limited ends the current Silver fix on Aug. 15. The selection was made by market participants following numerous meetings, a seminar, and two market surveys, after which the second survey “indicated a clear market consensus for the CME Group & Thomson Reuters proposal,” said the LBMA.

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