Gold: What’s Next: $1000 Or $2352?

Historic run on the Comex is preparing to take place ??

Macroeconomic  Factors

China has raced past India to become the world's top gold consumer. 

Gold analysts are the most bullish in six weeks as Janet Yellen, the nominee to run the Federal Reserve, signaled the U.S. The central bank is in no hurry to curb economic stimulus, reviving demand for the metal as a haven.

“We’re telling people just to ignore the noise in gold.  It certainly looks like a bottom and feels like a bottom @ 1226 as stated in my 2011 article .  I can’t recall when sentiment has been this negative.  Pretty much every technician is also negative about the breakdown.  However, in the face of all of this bearishness the fundamentals keep getting stronger

There are hints of tapering once again

But here we go again with strange activity in the gold market., but the reality as this selling is taking place in the paper markets, at the same time we have seen yet another pick-up in demand for physical gold. I think the fundamentals are getting better.  As an example, the recent news regarding China is distancing itself from the US dollar is really just a recognition of the obvious.  They have already scaled back their long-term purchases of Treasuries. 

In one of the alert I initiated in the month of April 15, 2013

Gold Brief : What next ? $1000 or $2352 ?

The Chinese had missed buying #GLD in the last bull run from 1175 to 1800 - 1924 as they were waiting for a technical level 1065 - Chinese have a lesson learnt in the past so they won't be taking any chance waiting for technicals 1180 or whatsoever as per the $1000 hype in the market doing the rounds now - Chinese will stack their gold reserve between the levels 1226 - 1300 for target 2352 

 What about the demand and supply factor ? Italy has dumped its gold reserve - the impact ? 

Will be balanced by Chinese buying - simple 

The Latest China Factor after we initiated the above alert ...

China really can’t stop piling up foreign exchange because of the nature of their economy.  This is, however, why you are seeing such massive demand by the Chinese for gold and other assets, as well as companies.  Also, the last official gold holding by the Chinese was announced in 2009, and that was a little more than 1,000 tons which is a little less than 2% of their foreign exchange holdings.  If you look at most Western countries they have 10% of their reserves in gold.  This is why the Chinese are massively accumulating physical gold. 

So I think we have some positive things coming from the Far-East, in particular for hard assets and for the gold market.  All of this is happening as China is the largest producer and consumer of gold in the world.  In fact, there is a lot of global demand for physical gold.  

The World Gold Council talks about a slowdown in the third quarter, but that only came about because India’s official demand has been suppressed as a result of higher taxes.
Forget About India`s Gold Demand - Let`s Talk about the world -   4.45 PM Nov 17th

Consumer demand globally - the strength of jewelry and bar and coin demand in 2013 to date can be seen when compared against the first three quarters of previous years. As of the end of Q3 2013, demand stood at 2,896t, 26% higher than the same year-to-date figure in 2012.

Global demand for jewelry - far and away the largest component of global demand - was 487t in Q3 2013, compared with 462t in the same period last year, an increase of 5%. Demand was particularly strong in China, where the figure reached 164t, a rise of 29% compared with the same period last year. Robust growth in the jewelry sector was also seen in the Middle East, Turkey and, significantly, across South East Asia, beyond China. After eight years of decline, the US jewelry market had its third consecutive quarter of growth with a shift to higher carat items – signalling the re-emergence of aspiration and luxury as key drivers of gold jewelry in the US.

Global bar and coin demand - also showed a year-on-year increase, reaching 304t, a rise of 6% compared to the same period last year. This takes an overall investment in bars and coins so far this year to 1,252t, a rise of 36% compared to the first three quarters of 2012.

Consistent with the first two quarters of 2013, the global gold market remains resilient, underpinned by the continued shift in demand from West to East, strong demand in consumer categories and solid central bank and technology sectors.

The growth we are seeing in jewelry, bars and coins in particular, demonstrates once again the unique diversity of gold demand, as the different sectors increase in prominence at different points in the global economic cycle, clear evidence of the ebb and flow of what is an extremely liquid market.

Restrictions Introduced by the Indian Government 

The restrictions introduced by the Indian government for importing gold through official channels had the intended effect of substantially suppressing demand, with total gold consumption in India standing at 148t in Q3, compared to 310t in Q2 of this year. However, the strength of Indian demand in the first half of the year means that full year consumer demand is still on track to narrowly exceed the 2012 total. One side effect of this was that while global recycling of gold fell 11% compared to the same quarter in 2012, in India the recycling figure increased more than fivefold to 61t.

The intervention of the Indian government in restricting gold imports to the country is obviously reflected in the official levels of demand this quarter, but this by no means indicates that the appetite for gold in India is waning. We have seen some increases in demand in other countries which have close links with India, some of which may be making its way back to the country through illicit channels, which have reopened in recent quarters following a long period of inactivity.

The Key Factors

Continued consumer growth in China. Total consumer demand was 210t in Q3 2013, a rise of 18% compared to the same period last year.
Jewelry consumption in South East Asia, outside China, was also strong. Hong Kong was up 28%, Vietnam up 14%, Thailand up 57% and Indonesia up 19% in the same quarter last year albeit of low bushes.

Jewelry growth in the rest of the world. Similarly, demand in the Middle East is up 9% in Q3 against last year and the US was up by 14%
Government regulations in India are dampening demand figures. India recorded a 32% decline in consumer demand compared to the same quarter last year. However year to date, demand remains robust, up 19% compared to the first three quarters of 2012, following the surge in demand sparked by two price falls earlier in 2013

Central banks continue to be strong buyers of gold, albeit at a slower rate. Q3 2013 was the 11th consecutive quarter of net purchases of gold

Third quarter gold demand of 869t was 21% lower than Q3 2012; this is due primarily to the Indian government intervention in their domestic market, and the year-on-year fall in ETF investment.The average price of gold in this quarter was US$1, 326/Oz, down 20% in Q3 2012

Global demand for jewelry was 487t in the quarter, up 5% on last year. US Jewellery demand increased by 14% - the highest third quarter jewelry demand figure since Q3 2009Investment in bar and coins saw robust demand, up 6% year on year to 304t

There was a net outflow from ETFs of 119t, as investors adjusted their portfolios

Net central bank purchases totalled 93t, 17% down on Q3 2012. Central banks have now been net purchasers of gold for 11 consecutive quarters
Demand in the technology sector was stable once again, totalling 103t, a rise of 1% on the same period last yearTotal supply is 1,146t.

Conclusion 

After considering all Macro economic factors its pretty clear there is going to be a run on the Comex not to be mentioned huge moves or call it operation flush out pops from no where & will not give time for traders to think what needs to be done   When this run on the Comex begins in earnest, we will have stunning $100 to $200 increases in the gold prices in a given day.

Levels 1226 - 1230 support near term target is capped @ 1269 - 1330 , this move will be almost $100 & from there if we consider a 200$ upmove 1330 - 1530 that squares our intermediate Resis or Gap filling target 1530 -1536 - 1560 

Another high probable tape is  a move of $200 from 1230 - 1430 & later 100$ upmove will take us to ultimate target 1530.

Talking about Gold Long term target 2352 once again I mention that in my 1226 article of gold initiated on 02 Oct 2011 I had particularly stated the This correction in gold is just a gut wrenching period of gold bulls and the long term bullish trend is still intact. 

Here I remember a quote by George Soros

"Once a Trend is established it tends to persist & to run its full course"

The Long term Bullish Trend in gold established which failed in the 1924 Range is likely to persist and complete its course in 2352.