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Gold traders are the most bullish intwo months after mainland China imported the most metal everfrom Hong Kong and investors bought U.S. bullion coins at thefastest pace in more than two years.
Eighteen of 23 surveyed by Bloomberg expect the metal togain next week, the highest proportion since Nov. 11. MainlandChina imported almost 102.8 metric tons in November, valued atabout $5.4 billion, trade data on Jan. 11 showed. The U.S. Mintsaid it sold 85,500 ounces of American Eagle gold coins in thefirst 12 days of January. Full-month sales would reach 213,750ounces at that pace, the most since December 2009.
Bullion rallied 6.2 percent since plunging to within 1percentage point of a bear market on Dec. 29, on mountingconcern that economic growth is slowing and European leaders arefailing to contain the region��s debt crisis. Holdings (.GLDTONS) inexchange-traded products backed by the metal are heading for thebiggest weekly expansion since mid-November and are within 2percent of an all-time high, data compiled by Bloomberg show.
��The thing that��s caught people��s minds is the massiveincrease in Chinese buying,�� said Ross Norman, chief e! xecutive officer of Sharps Pixley Ltd., a brokerage handling physicalbullion in London. ��Gold has demonstrated time and time againits ability to hold purchasing power. It looks expensive andpeople talk about bubbles, but it��s not.��
World Index
Bullion rose 10 percent last year on the Comex in New York,beating the 1.2 percent drop in the Standard & Poor��s GSCI TotalReturn Index of 24 commodities and the 9.4 percent decline inthe MSCI All-Country World Index of equities. Treasuriesreturned 9.8 percent, a Bank of America Corp. index shows.
The metal fell almost 19 percent from its record closingprice of $1,891.90 an ounce on Aug. 22 through Dec. 29, takingit below its 200-day moving average for the first time sinceJanuary 2009. Prices closed above the moving average on Jan. 10and settled at $1,630.80 in New York today.
Holdings in bullion-backed ETPs reached 2,357.3 tonsyesterday, valued at $124.1 billion and exceeding the reservesof all but four central banks.
China overtook India in the third quarter as the largestgold-jewelry market, according to the World Gold Council. Thegain in imports from Hong Kong may be a sign the central bank isadding to reserves, according to Sharps Pixley��s Norman. ThePeople��s Bank of China last made known its gold reserves of1,054 tons more than two years ago.
Call Options
There were 8,002 call options traded on Jan. 11 givingholders the right to buy the metal at $2,200 by July, and thesix most widely held holdings are for calls at 22 percent aboveprices today, Comex data show. Options traders are making fewerbearish bets against the SPDR Gold Trust, the biggest gold-backed ETP, than at any time in the past 20 months.
Gold is also benefiting from concern the euro zone willtumble back into recession. Germany, the region��s biggesteconomy, shrank ��roughly�� 0.25 percent in the fourth quarterfrom the third, the Federal Statistics Office said Jan. 11. Theeuro region will contract 0.2 percent this year, compared withgrowth! of 1.6 percent in 2011, the median of 21 economistestimates compiled by Bloomberg show.
The rebound in gold is being threatened by a strengtheningdollar, which rose to a 15-month high against six majorcurrencies this week. The 30-week correlation coefficientbetween the greenback and bullion is now at -0.43, data compiledby Bloomberg show, with a figure of -1 meaning the two alwaysmove in opposite directions.
Housing Stagnant
Global equities climbed today to the highest level sincemid-November, and the U.S. Federal Reserve said Jan. 11 that theeconomy improved last month across most of the country even ashiring was limited and housing remained stagnant.
��Gold was held back toward the end of last year because ofdollar strength and people having more confidence in the U.S.economy,�� said Carole Ferguson, an analyst at Fairfax IS inLondon. ��If people feel the U.S. economy will pull the wholeworld up a little bit, then you could see gold being very flatto trading down.��
Hedge funds and other money managers have become lessbullish, cutting bets on higher prices by 56 percent since thebeginning of August. They reduced their net-long position to110,594 futures and options in the week ended Jan. 3, the lowestsince January 2009, U.S. Commodity Futures Trading Commissiondata show. The last time the position was that low, pricesclimbed about 17 percent in the next four weeks.
Benchmark Contract
Ten of 22 traders and analysts surveyed by Bloomberg expectcopper to fall next week and three were neutral. The metal fordelivery in three months, the London Metal Exchange��s benchmarkcontract, declined 21 percent last year and gained 5.3 percentthis month to $8,000 a ton.
Raw sugar retreated 27 percent last year and settled at23.84 cents a pound today on ICE Futures U.S. in New York, and a2.3 percent gain this month. Six of 11 people surveyed expectprices to gain next week.
Fourteen of 22 anticipate higher corn prices, while 15 of24 said soybeans will advance. C! orn fell 7.3 percent this monthto $5.995 a bushel after increasing 2.8 percent in 2011.Soybeans are down 4.1 percent this month at $11.5825 a bushelafter sliding 14 percent last year.
��You have a potential disturbance factor which is the eurocrisis,�� said Bayram Dincer, an analyst at LGT CapitalManagement in Pfaeffikon, Switzerland. ��Investors areoptimistic that the global growth rates are still high enough tosupport demand and commodity prices.��
Gold survey results: Bullish: 18 Bearish: 3 Hold: 2Copper survey results: Bullish: 9 Bearish: 10 Hold: 3Corn survey results: Bullish: 14 Bearish: 5 Hold: 3Soybean survey results: Bullish: 15 Bearish: 5 Hold: 4Raw sugar survey results: Bullish: 6 Bearish: 3 Hold: 2White sugar survey results: Bullish: 5 Bearish: 3 Hold: 3White sugar premium results: Widen: 4 Narrow: 5 Neutral: 2
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