Gold has been hovering around the $1690 an oz. for the last week but seems unable to make that break through to $1700 and above to confirm its upward surge from the low of $1630 seen as recently as January 3rd. Reports of heavy physical buying have been negated by lack of activity and the weak confidence shown by hedge and institutional investors, speculators and retail investors in gold fundamentals, linked ETFs and mining.
It hasn’t gone down well with gold buffs that India has raised the import duty yet again in an attempt to stem the deteriorating value of the rupee. Indians love their gold and this move will only enhance their traditional thinking of gold as a preserver of their wealth. We may not hear of it but be sure that illegal imports of the physical metal to avoid the taxes will only increase to satisfy growing demand.
Central Banks Still Active Gold Buyers
Elsewhere we note that Russia has added over 600,000 ounces to bring the total to 9.5% of its reserves with the stated target to be 10%. The Bank of Korea is yet another central bank actively adding to its gold reserves and not to forget China’s ever increasing appetite for the yellow metal.
Does Golds’ Return To Germany Shows Lack of Confidence In the US?
Is a Breakout Imminent?
Finally last week saw a small increase in the net long positions in the gold futures market. Perhaps of little consequence but with the volume of trading being low and with a noticeable lack of enthusiasm for the many bullish fundamentals being the order of the day, we may be excused for finding grounds for optimism that a breakout may be imminent. Not if, but when will gold break through the $1700 barrier is the question. When it does, will the next stop be $1800 in short order? Sounds like a reasonable bet to us.