"Physical gold buying in the region has been good, and the strength of the Indian Rupee has been a very strong factor in this turnaround," says Gerhard Schubert, Head of Precious Metals, Emirates NBD
In the banks Precious Metals Report, Schubert writes that the Indian Rupee finished the week at 51.91 to the US dollar while Gold at US$1782.00 – was up US$10 from last week.
“The gold market traded up over the course of last week and reached an 11-month high on Friday after touching US$1796.
“The positive NFP numbers triggered some profit taking, which saw gold falling back to the mid US$1770 levels before recovering to close the week at the US$1782 level.
“It looks pretty clear that the market is long and overbought, but there is lack of news that could trigger a wash-out in order to potentially facilitate fresher buying. The initial resistance at US$1790 is now consigned to history books, but the US$1800 level seems to grow in importance.
“This level, however, is mostly psychological, and the regaining of the US$1800 would lead to an even stronger bullish mode for gold.
“There are many analysts out there who are now amplifying the call that gold could still reach the US$2000 within 2012, something which we have advocated without fail all this year,” the report states.
Schubert also writes: “Gold reached new all-time highs last week against the Euro, Swiss Franc and South African Rand.
“The illegal strikes and the escalation in the South African mining industry are of growing concern for the whole precious metals industry. The hardening stance of both sides and the potential political implications, in a country which will entertain new parliamentary elections in December, is adding to the importance of the situation.
“Physical buying in the region has been good, Gold kilo bars loco Dubai are trading again with a small premium against loco London. The strength of the Indian Rupee has been a very strong factor in this turnaround.”
Silver at US$34.50 is unchanged from last week. Silver finished the week unchanged for the second week running and that is very unusual in itself. However, silver traded again above the US$35 level on Friday, before trading down to the support level at US$34.30 after the release of the NFP numbers.
Consolidation is the best word to describe the current status quo of silver for a lack of a clear trend.
The next directional move will most likely be inspired by either gold or platinum but silver seems to be only the passenger and not the driver at this moment in time.
Speculations surrounding Spain helped to lower the 10-year bond yield to 5.69 per cent. The European Central Bank (ECB) left interest rates unchanged at 0.75 per cent.
The Bank of England (BoE) left interest rates unchanged at 0.50 per cent. Furthermore the BoE decided against further Quantitative Easing (QE) at its meeting last Thursday.
The September Non-Farm-Payroll (NFP) numbers were released and 114.000 new jobs have been created over the course of the last month. The August NFP number has also been revised upwards from 96.000 to 142.000. The unemployment rate fell to 7.8 per cent, the lowest rate since January 2009.
Amplats sacked 12,000 workers in on-going disputes over pay. The miners have been staging unauthorised wildcat strikes. Goldfields evicted 5,000 workers from dormitories over claims of intimidation of fellow workers. An approximate number of 75,000 workers are currently striking illegally in the South African Precious