SocGen: “Sharp” Gold Rally As US GDP Surprises “Dramatically” to Downside
Tuesday, 20 March 2012
The superficially rosy US economic outlook has dimmed gold’s safe haven appeal for speculators and some investors. Some investors opted to allocate cash to equities which have outperformed and been more buoyant of late.
The flight to safe haven gold has slowed in recent weeks due to the perception that the worst of the Eurozone debt crisis is over and that the US economy is recovering.
Weak speculative hands have been washed out of the gold market and many smaller retail investors have also sold bullion recently due to the widespread concern that gold is overvalued and a bubble.
Jewelers in India are protesting the tax hike on gold imports and plan to keep their shops closed for two more days. This is India’s first nationwide strike in seven years and shows how important the gold industry is in India. The excise duty hike is expected to lead to less demand however Indian demand may again prove to be robust despite tax increases.
SPDR Gold Trust, the world’s largest gold-backed ETF, said its gold holdings remained unchanged at 1,293.268 metric tonnes for the 5th straight session on Monday, despite the drop in prices last week.
Gold will have a “sharp” rally as the U.S. boosts monetary stimulus because of a faltering economy in the coming months, Societe Generale said in a report that was picked up by Bloomberg.