Los Angeles CA, August 27 (Tangible Investments) - by James O’Dell - The price of Gold edged up $4.15 or 0.33 percent on Tuesday to close at $1,280.70 an ounce on bargain hunting and short covering; after the dollar fell from a 13 month high, releasing pressure on the metals. Silver traded flat at $19.37 an ounce while the Gold/Silver ratio, the measure of the number of Silver ounces needed to buy an ounce of Gold, rose to 66.12.
Gold is holding above trend-line support around $1,270 an ounce, said TD Securities on Tuesday, adding that “this suggests that (speculators) are not ready to go too short, before the monetary questions are fully answered.”
In the meantime, while physical Gold demand from Asia has been somewhat thin in recent months, MKS (Switzerland) says that it is seeing “glimmers” of demand from the region over the past few sessions. Demand is “most noticeably from China where the SGE (Shanghai Gold Exchange) premium over loco London prices has extended to $3-4. Seasonal demand from India with the upcoming Diwali festival could also act as a parachute for any significant market sell-off in the near future,” said MKS.
“Gold proved able to hold its own yesterday despite what was actually a relatively negative environment: a still firm US dollar and rising equity markets – the S&P 500 closed at above the 2,000 point mark yesterday for the first time. (These) are likely to have contributed to the further reduction in gold ETF holdings,” said Commerzbank. “The numerous sources of geopolitical crisis are evidently preventing the Gold price from slumping,” the bank added.
Meanwhile, HSBC says that it expects central banks to remain net buyers of Gold in 2014, “We expect central banks to remain buyers of Gold as a means to diversify away from the USD.”
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