Hedge funds’ combined holdings in gold futures increased to the most bullish since January on mounting concern that conflict in the Middle East will boost crude-oil prices, slowing economic growth and stoking inflation.
Gold cannot be printed or manufactured in contrast to the currency. That’s why over the long term it has kept its value as the ultimate currency. There can be no “gold war.” However, we often hear about a currency war.
Gold prices are trading sharply lower in the early going Monday, hitting a fresh five-week low, on fresh technical selling pressure. April Comex futures prices dropped back below the key 200-day moving average.
Gold dipped today despite Wall Street hopes that the US Fed will embark on more QE. As we have said for some time QE3, or a new term for electronic and paper money creation, is a certainty and this will lead to inflation hedging and safe haven demand for gold.
Gold has gradually rose 3% in the last eight sessions and is also supported by the debt crisis in Europe with initial euphoria over a victory for pro-bailout parties in Greece giving way to persistent concerns over Spain and Italy and their banking sectors.
Gold fell initially in Asia before trading sideways and this range trading has continued in European trading. Gold edged higher Tuesday after hopes were dashed that Spain's bank bailout would be the panacea that would lead to alleviating the euro-zone debt crisis.
Gold rose quickly from $1,631/oz. to nearly $1,650/oz. in minutes on volume with some chunky 3000 lot plus batches of orders going through on the Comex pushing gold up. A determined seller again appeared and gains were capped at that level.
Gold and silver prices headed lower this morning while platinum and palladium extended their Tuesday rally with fairly hefty additional gains. Gold retreated towards the $1,750 area while silver fell back to near the $34 level as profit-takers moved in following yesterday’s Sino-Euro-news-induced euphoria.