It was another big week for gold. Thursday saw a rise in prices close to 2% and now Friday, gold is holding strong around the $1,365 per ounce mark. This week saw movement from hedge fund leaders, the release of new job data and even reports from the World Gold Council. Here is a look at the events.
Soros and Paulson Sell:
George Soros – chairman of the Soros Fund, as well as John Paulson – president of Paulson & Co. decided to make some big cuts. Soros sold over 500,000 shares of SPDR Gold Trust while Paulson cut his ETF holdings in half. Some experts feel this may actually be good news for gold. Granted, while major selloffs of gold are not good for short-term prices, it may mean that gold has gained even more stability during this correctional period. Electronic demand will now have an even stronger foundation from which to grow upon in the coming years and months.
New Job Data:
The Federal Reserve may be looking to taper their bond buying programs in the near future. A recent article by Market Watch stated, “Signaling a slower pace of layoffs, the number of people who applied for new jobless benefits fell 15,000 to 320,000 in the week that ended Aug. 10, hitting the lowest level of initial claims since October 2007.” This data released on Thursday caused gold prices to dip slightly out of concern that the Fed may start tapering as soon as mid-September.
World Gold Council Report:
Thursday also saw a report from the World Gold Council which indicated the overall demand for gold has dropped to its lowest levels in close to three years. Most of this is due to outflows of exchange-traded funds. On the other hand, physical gold demand is up near 2% in the past quarter. Lower prices seem to be prompting jewelers across the globe to buy during this lull.
Prices on the Move:
A lackluster performance from the stock market this week in combination with an increase of physical demand seems to have pushed gold to its highest mark in almost two months. Experts believe there has been a recent surge in safe haven buying from investors to protect their wealth from recent stock market lulls. It seems despite gold’s overall drop this year, it is still seen as a trusted investment for wealth preservation.
Investors will keep their eyes on these recent gains in the coming weeks. The biggest question on everyone’s mind will be what the Fed decides to do mid-September and if this recent run can withstand the final call to begin tapering the US bond buying program.