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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 12/03/2009 : 19:46:19
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Gold’s Momentum Breaks as Chinese Central Bank Governor Implies Commodity a “Bubble” Asset
Spot Gold - $1,212.70 // -$3.00 // -0.25%
Gold forged a new intraday, record high Thursday; but the high-flying commodity wouldn’t be able to hold on to its gains. Today’s price action closely mirrored the path of its benchmark counterpart: the US dollar. Playing its role as a hedge to the currency, the greenback’s second consecutive daily advance tempered the unchecked momentum the commodity has enjoyed this week (and which has generally supported price action in the spirit of trend since the beginning of November). However, this correlation founded on speculation proved a source of concern from an unexpected official. PBoC Governor Hu Xiaolian was quoted as saying the precious metal’s price was very high and that the central bank would be careful with investing in “bubble” assets. Considering the prohibitive cost of gold; central banks are one of the last few promising buyers left in the market. Considering China has excess funds to invest in their continued effort to diversify away from the US dollar, their labeling the commodity as essentially at a oversold levels is concerning. Perhaps investor interest can maintain momentum. SPDR Gold Trust, the largest ETF backed by the gold, reported a third consecutive increase to its holdings to 1,131.21 tons. This is very close to the record 1,134 tons set approximately six months ago.
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Gold’s Momentum Breaks as Chinese Central Bank Gov
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