The sideways trading of the last couple of months is showing all the signs of gold returning to another decade-long bull market run. With the continuing trend of the 17-euro countries failing economically with unemployment on the rise, the last three months of dismal growth of the U.S. Job Market putting another round of the economic stimulus probable are all indicators positives for gold.
Europe’s prevailing anti-austerity and India abolishing excise duty for gold are producing good signs for a significant favorable environment for the precious metal.
In the LBMA market steady growth number since the beginning of this year from 3% to 9% have occurred in spite of all the turmoil over the euro. That aside, in the U.S. sliding gold market of $40 on Tuesday in New York along with the metal break down in February have developed in spite of half market job growth over January. Resulting in a fluttering $1,600 an ounce figure and closing Tuesday at $1,606.90 for a 2% price drop.
Gold historically has been a safe having for trading investors as seen in 2011 along with historically has risen from two to 4-digit pricing. UBS’ Edel Tully suggests three major factors have changed the equation, injecting significant upside risk to current prices.
With the subpar job economic numbers since January the U.S. is positioning for what appears to be much stronger dismal recovery phase. Last Friday’s report showed 115,000 workers were added to the economy in March, well below the 165,000 expected by analysts and very far from the 200,000-plus seen in early-2012. Said Tully:
“Although Friday’s softer non-farm payrolls do not automatically translate into a QE certainty, the data re-confirms the many question marks that investors have regarding the US recovery. So long as there are even vague possibilities of additional stimulus, this is positive for gold.”