Investor demand still remains an integral part of the gold equation, too. Moreover, in the face of a stronger dollar and speculation that the Federal Reserve could raise interest rates over the mid- and long-term, gold prices could still move modestly higher with some help from increased demand out of the emerging markets, namely China and India.
“Money managers boosted their net-long position in gold futures and options contracts by 6.1 percent in the week ended Sept. 12, according to Commodity Futures Trading Commission data,” reports Bloomberg. “Bullion climbed 70 percent from December 2008 to June 2011 as the Fed bought debt and held borrowing costs near zero percent. That era of easy money is ending as the Fed raises borrowing costs and policy makers prepare to shrink the $4.5 trillion balance sheet.”
IAU has added over $1 billion in new assets since the start of the year. The aforementioned gold ETFs are up more than 1% over the past month.
For more information on the gold market, visit our gold category.
Tom Lydon’s clients own shares of GLD.