Iran Oil Flow Slows, Price Fears Rise – Risk of War to Support Gold
By Gold Core
Thursday, 29 March 2012
Gold fell $18.20 or 1.84% in New York yesterday and closed at $1,663.10/oz. Gold traded sideways in Asia prior to seeing a slight climb to $1,665/oz in late Asian and early European trading prior to price falls in Europe.
Gold continues to struggle due to poor short term technicals and a slight decrease in global physical demand in recent days – particularly from India.
Gold closing below the 200-day and 100-day daily moving averages yesterday further clouded the technical picture and a weekly close below the DMAs would likely result in further price weakness.
End of the quarter book squaring and selling and profit taking are likely contributing to the weakness. Dollar strength and equity weakness may have also lead to selling on the COMEX as speculators covered losses in equity markets.
The durable goods and future business investment numbers were poor and fell short of expectations, raising the prospect that economic growth in Q1 may be below the Fed’s and the bullish forecasters estimates.
The poor numbers further clouded the US economic outlook and raised the prospect of continuing ultra loose monetary policies and QE which will be bullish for gold.
Markets await more clues from US economic data. Negative US GDP and US weekly jobless claims may lead to safe haven gold buying.
European investors will focus on the outcome of the Italian bond sale as Rome aims to sell up to 8.25
billion euros of debt.
Clients are reluctant to buy the dip fearing further weakness and March has been poor for physical gold sales to investors and store of wealth buyers.
However, gold’s fundamentals of broad based global demand remain sound and mean that this is likely another period of correction and consolidation.
The primary characteristic of all bull markets is that they climb a “wall of worry.” Gold is continuing to climb a “wall of worry” with much bearish sentiment and frequent assertions that it is a bubble.
While oil prices came down yesterday partly due to speculation that the US might tap its strategic reserves, the increasing risk of a confrontation between Iran and Israel, the US and many western powers remains real and should support oil and gold prices.