Cautious outlook clouding gold in late 2011 appears to be lifting

The cautious outlook that clouded Gold in late 2011 appears to be lifting. The metal is starting to look more appealing to a wider audience once again,” UBS said in a research note.

Growing positive sentiment is reflected in the emergence of call option buying this week, most notably in 1800 calls with 2-3 month maturities. Sizeable interest in August 1900/2200 call spreads was also seen.

And among the often-cited positives that gold holds right now are the lack of speculative length primarily, and secondly its diminishing correlations with the dollar and risk. So with sentiment improving and positioning so light, this looks a pretty positive position for gold.

Analyst Edel Tully says exchange-traded-fund investors are holding firm, physical demand out of India remains above average, Shanghai Gold Exchange turnover remains elevated, and U.S. Mint coin sales remain decent, with January sales of 85,500 ounces already ahead of December’s 65,500.

However, UBS cautions that the approach of the Lunar New Year holidays from Jan. 23 will put the brakes on physical demand and trading flows in much of Asia, particularly China, for about a week. – CommodityOnline

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Posted by admin on Jan 13 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry