Physical gold demand hit a two-year high in the third quarter this year, according to the World Gold Council. Demand increased 8%, compared to the third quarter of 2014. to total 1.120.9 metric tons. This boost was mainly in coin and bar demand, more than jewelry. Gold coin and bar demand was up 6% from the same time last year, but increased a whopping 46% from the second quarter of this year.
Central banks got in on the buying spree, with a net increase of 175 metric tons for the quarter. This is the second-highest quarterly gain on record. The buying was led by Russia and China, as usual, though the central bank of the United Arab Emirates bought gold for the very first time (5 metric tons)
Friday the 13th Gold Demand
Spot gold is trading near unchanged this morning as the US dollar reverses recent losses to make another run at 99 on the DXY index of a basket of currencies. Gold is in a descending channel, as the effects of a Federal Reserve interest rate hike are being priced in. $1,079 continues to be solid support, hinting that we may have reached a short-term bottom. We have seen continued support at this level for several days. Holding on at the $1,079 level will eventually break that descending channel to the upside.
Unlucky Day for Wall St.
Friday the 13th is proving unlucky for stocks, as Wall St. adds to yesterday’s losses this morning. Stocks are being drug down by disappointing earnings and economic data that came in below expectations. Producer prices unexpectedly fell by 0.4%, against expectations of a 0.3% gain. Auto sales also recorded a surprise fall, after a strong month in September. This pulled retail prices for October down to barely register a 0.1% gain. Analysts were expecting a 0.3% gain. Some attributed this disappointing performance to the fact that rent prices were rising at a fast pace, absorbing more of the household budget.
Rate Hike Still On?
The Fed is still signalling a rate hike in four weeks, despite today’s tepid economic data. Cleveland Federal Reserve president Loretta Mester (who will be a voting member of the FOMC next year) said that the time for a rate hike was “quickly approaching.” This continues the hawkish tone set by the three top Fed officials, as well as Federal Reserve branch presidents in a media blitz yesterday.
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