Precious Metals Weekly Overview


Emirates NBD’s Precious Metals Report is out, prepared by Gerhard Schubert, Head of Precious Metals, Emirates NBD.

The August Non-Farm-Payroll was unchanged in the U.S., which was a very disappointing number, and the reaction of the markets was swift and clear. Gold rallied immediately, but  it was already up $35  even before the payroll figure was released. Some very courageous people took a wild guess on these numbers and bought massively on Friday morning, during European trading hours.

The outlook for next week looks very positive for Gold, writes the Head of Precious Metals at Emirates NBD. The yellow metal has consolidated nicely above 1800 and the sell-off from the week before down to 1700, can now officially be declared as THE correction, which was the buying opportunity.

In the U.S. President Obama is going to be giving a major speech to the combined houses in the US on Thursday and the FED is having their next extended meeting on the 20th and 21st of September. The President is already on an election platform for 2012, and the Republican Party-dominated Congress is not likely to be all-embracing. In the view of  Gerhard Schubert, the FED can foster the right policies, but they do not have a magic wand.

European Sovereign debt issues are also back in the headlines and the passing of European System of Financial Supervisors (ESFS) in the German parliament is not guaranteed. Furthermore, the public mood in Germany is in favour of the EURO but NOT in favour of bailing out any more European countries. This could become critical in the current scenario. The rumours about watered down austerity measures in Italy and the pause in talks concerning Greece are certainly helping Gold, but are negative for the Eurozone overall. The ECB might feel duped in buying these massive amounts of Italian bonds, whilst Italy displays second thoughts on implementation of their promises.

Gold: 1883.00 – up $55 on the week and that is impressive. Gold consolidated very nicely during last week and was actually caught in a relatively tight range of $1815 to $1835. The trading ranges got smaller and smaller and that is reflected in the lower volatility rates. That was until Friday, when the whole day was dominated by buying; firstly well ahead of the non-farm-payroll, then even more so afterwards.

According to Gerhard Schubert, Head of Precious Metals, Emirates NBD, the bull market will continue and there are no signs that the Gold price is heading towards a bubble. The general economic outlook is worsening, which means the investment environment is displaying the perfect storm for investments.


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