World Gold Council data seen as bullish

Demand for gold rose by 6 percent to a 1-1/4 year high in the third quarter of 2011, driven by central bank purchases and European demand for bullion against the backdrop of the escalating euro crisis, according to a report by the World Gold Council (WGC).

After a 20 percent slump in the third quarter from the previous one, gold imports to India, the world’s biggest consumer of bullion, are likely to recover in the last quarter of 2011 as demand emerges from traders who destocked in the third quarter of the current year, the World Gold Council’s India head said.

“Crucially, in today’s report, the WGC note that additional purchases were made by a number of countries’ central banks, which cannot currently be identified due to confidentiality restrictions,” UBS said in a research note.

“The gap between the known purchases and the confidential ones is very significant… This information is very bullish. And no doubt the market will be busy speculating on the identity of such buyers.”

Even a move by hedge fund manager and long-time gold bull John Paulson to slash ETF bullion holdings by a third does not appear to be a sign that he is abandoning his upbeat view of the metal, industry sources and analysts said.

“Paulson may be moving to gold equities or physical gold. After all even with ETFs there is counter-party risk,” Credit Agricole analyst Robin Bhar said. “He may be switching holdings from one gold vehicle to a safer gold vehicle.”

Holdings of the largest gold-backed exchange-traded-fund (ETF), New York’s SPDR Gold Trust climbed 0.72 percent from Tuesday to Wednesday, while that of the largest silver-backed ETF, New York’s iShares Silver Trust remained unchanged for the same period.

Spot silver fell 2.88 percent to $32.71 an ounce from $33.68 late in New York on Wednesday, platinum fell 0.91 percent to $1,598.2 an ounce from $1,612.7 and palladium fell 3.18 percent to $625 an ounce from $644.72. – Reuters

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Posted by admin on Nov 17 2011. Filed under Gold predictions, Gold price. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry