gruthingold.com / By truthing / August 16, 2013 at 08:57
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Gold traders are the most bullish in five months on signs that demand for coins and jewelry increased during a plunge in prices that prompted billionaire investor John Paulson to cut his holding for the first time since 2011.
Thirteen analysts surveyed expect prices to rise next week, four were bearish and five neutral, the highest proportion of bulls since March 8. Consumer buying of the metal jumped 53 percent in the second quarter from a year earlier, almost making up for the record sales of exchange-traded products backed by bullion, World Gold Council data show.
Gold is set for its first annual decline in 13 years after some investors lost faith in the metal as a store of value, sparking losses for mining companies and hedge funds. Paulson, the biggest investor in the SPDR Gold Trust, the largest gold ETP, cut his stake by 53 percent in the second quarter, an Aug. 14 government filing showed. The slump spurred purchases and a 16 percent price rally from a 34-month low on June 28.
“People buying physical gold are more about having a store of wealth in the medium to long term whereas the ETP liquidations are more the speculative side,” said Mark O’Byrne, the executive director of Dublin-based GoldCore Ltd., a brokerage that sells and stores bullion coins and bars. “Physical demand remains very robust. People see gold prices as good value at these levels.”
The metal fell 19 percent to $1,363.37 an ounce in London this year. It reached $1,180.50 on June 28 after entering a bear market in April. The Standard & Poor’s GSCI gauge of 24 commodities rose 0.4 percent since the start of January and the MSCI All-Country World Index of equities gained 9.9 percent. Treasuries declined 3.4 percent, the Bloomberg U.S. Treasury Bond Index shows.
