Pinnacle Activity Ticker
Gold Hits Near Record High in Euros and Six Month High in Dollars
Pinnacle Digest writes: Did you know that today, in Asia and London, gold hit a new 6 month high at $1,713 an ounce? Just a month ago gold was being touted as a bubble that finally burst. It’s always surprising how quickly sentiment can change right before the ECB’s announcement. As Adrian Ash, from bullionvault.com, stated “traders awaited the European Central Bank's latest policy decision – widely expected to unveil a quantitative easing-style program of buying weaker government bonds.”
Today’s gold price in Euros marks a near all-time record as the region battles with a fiscal crisis so severe that several countries may be facing bankruptcy if not bailed out. Given the dire situation for Spain and Italy (Greece’s concerns have been brushed aside as the region faces greater challenges now), many industry pros believe the ECB has no other choice than to start buying bonds immediately. Tom Price of Swiss bullion bank UBS commented to India's CNBC-TV18 this morning that "I think the ECB will start buying bonds mainly because there is no other short-term solution available to Europe to support growth". Gold hit €1355 per ounce on the back of the ECB bond purchasing expectations.
Tom Price of Swiss bullion bank UBS goes on to credit gold’s rise to new longs establishing a position and short covering (given the expected bond purchase program from the ECB). While we believe the ECB has no other choice but to purchase Spanish and Italian bonds, it has been slow to act in the past and we would not be surprised if nothing bold was announced today. If this is the outcome, watch for gold to collapse in value by nearly $50 an ounce within a day. With that said, Tom Price’s price target for gold remains at $1900 an ounce for Q3.
Click here to read Adrian Ash’s latest article documenting gold’s market activity.