Gold demand witnessing shift from professional investors to physical buyers: Societe Generale

Thursday, November 1, 2012
By Paul Martin

CommodityOnline.com
01 November 2012

Gold exchange-traded-fund holdings previously picked up from summer until around the third week of October, boosted by the third round of quantitative easing in the US, before momentum slowed.

NEW YORK (Commodity Online): There appears to be some shift in gold activity lately from professional investors toward physical demand, said Societe Generale, a large European bank and a major financial services company.

According to the bank, gold exchange-traded-fund holdings previously picked up from summer until around the third week of October, boosted by the third round of quantitative easing in the US, before momentum slowed.

Also, the net-long position of Comex speculators has fallen in the last couple of weeks, as reflected by Commodity Futures Trading Commission data. This now stands around 769 metric tons, compared to 837 in mid-October.

However, the physical market is picking up. “In India, the onset of the major festival seasons has prompted good jewelry and coin demand. Whether this persists through to Diwali (which culminates on Nov. 13) remains to be seen, but recent local news is that stockists and traders are back in the market following a tentative price stabilization just below Rp30,000 per 10 grams. In other parts of the world, there are signs of bargain hunting on any approach toward $1,700,” said Robin Bhar, analyst with Societe Generale.

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