Gold remains generally well bid around $1200, and near three-week highs, amid mixed U.S. economic data. The yellow metal remains narrowly confined in this holiday shortened week.
Gold retreated modestly in reaction to an upward revision to Q3 U.S. GDP, where a downward revision was widely anticipated. The economy grew by 3.9% on an annualized basis in Q3, up from the 3.5% preliminary print. However, that good news was quickly offset by weak home prices and a sharp drop in consumer confidence in November.
The latter is particularly disconcerting going into the all-important Christmas shopping season. ZeroHedge noted that confidence missed expectations by the widest margin since June 2010, despite record high stocks and plunging gas prices.
Robust physical demand is helping to underpin gold as well. Lawrence Williams reports that Chinese demand is likely to come in around 2,100 tonnes for 2014. That’s less than 5% below the record 2,199 tonnes of demand seen in 2013. Despite reports of “demand weakness” throughout the year, we’ve consistently pointed out that, demand has actually been quite strong compared to recent years.
We’ve also seen huge demand from India in recent months. We’ve seen the Russians buying aggressively. The Swiss may have to buy significant amounts of gold, of the gold referendum passes this weekend. Even the ECB has made noise about possibly buying gold in order to stoke inflation.