Last year’s ETF gold demand stands at the lowest annual level since these vehicles were launched late in 2004. Many ETF speculators still hold large positions, but recent price drops and rising volatility have eroded a portion of the belief that gold is always a “safe haven” investment.
A renewed slide in gold prices commenced shortly after the release of the Fed’s Beige Book on Wednesday afternoon and it then intensified into Thursday with the parsing of the Bernanke Congressional testimony.
The final trading session of this once again indecisive week in gold commenced with a price drop. The yellow metal erased Thursday’s gains and retreated to under $1,575 in slow pre-market action as the US dollar picked up some steam.
This morning’s opening in New York brought with it some modest selling by participants ahead of the US Labor Department’s August jobs data. The principal take-away number was the decline in US unemployment to 8.1%.
Metals markets opened marginally higher on this US Election Day as the US dollar traded virtually flat and as crude oil advanced by about thirty cents per barrel. Speculative participants appeared to be willing to take only small bites at the market.
Most commodities gained this morning as lingering optimism related to future demand was still manifest in the wake of China’s easing of bank reserve requirements and following perceptions that the European deal with Greece will be good for the sector in the near-term.
Last week’s wide price swings continued to befuddle and frustrate speculators in the commodities’ space and for a fourth consecutive week the results revealed that hedge fund players placed their bets incorrectly in these markets.