The Daily Nugget: Who’s Been Buying Gold?

Like last week the gold price is set to end the week on its longest weekly rally since March this year. Turd Ferguson wrote last night that we haven’t seen three consecutive weeks of gold price rises since August 2012, will we see this again within a year?

Despite positive housing data from the US, the jobless claims numbers yesterday were enough to return traders to gold, for now. As we wrote yesterday, we believe gold will continue to hover between $1,280 and $1,340 until markets are given a more solid indication from the Fed.

Currently the US Dollar remains at a one-month low which has helped the gold price, setting it up nicely for its third consecutive weekly gain. At the time of writing gold has gained over 8.5% this month. It has already climbed $160 from the 3-year low it hit back in June. Whilst gold is yet to recoup its losses, the general sentiment in the West is certainly less bearish.

Holdings in the SPDR gold trust continue to fall, yesterday they fell to as low as 927.36 tonnes. Look out for our ETF analysis later today.

Will central banks do enough to help gold price?

Last year as banks issued their 2013 gold price predictions anyone who saw the bull-run continuing attributed gold’s performance to central bank buying.

It seems that they were not wrong, IMF data today shows that both Russia and Kazakhstan continued to buy gold last month, for a ninth straight month. Neither expanded holdings hugely, Russia by 0.3 tonnes and Kazakhstan by 1.4 tonnes. Surprisingly, Turkey’s holdings fell after an 11-month climb. Greece and Germany increased their gold reserves.

These small increases suggest that it won’t be central bank gold buying that will be driving the gold price back up, for now, but it will certainly help to provide support. These central banks are no doubt mopping up the several tonnes of ETF outflows seen this year. Where central banks will continue to contribute is to the dramatic currency wars, which will inevitably have to continue until the bitter end.

Asia continues to buy gold

Interest in China’s gold demand has certainly peaked this month. The World Gold Council said yesterday that they believe the country’s demand for gold investment could reach 1,000 tonnes. Should this happen then it will take over India as the world’s largest gold consumer.

Speaking of India, yesterday we brought you news of increased levels of smuggling, and now news of premiums. The government announced earlier this week that 20% of gold imports must be destined for export. This has now caused shortages and premiums of $20 over spot.