The gold market this week has performed impressively in the face of what could have been very negative influences from the dollar. Furthermore the gold market has shrugged off overnight price forecast reductions from Goldman Sachs.
Apparently Goldman now expects gold to be only at $1,300 in three months, $1,325 in six months and $1,375 in one year and those price levels were moderately reduced from previous forecasts by roughly $50 to $75. However in the end Goldman was still bullishly biased toward gold despite the reduced targeting.
The market is also drafting some support from Asian stories overnight indicating that gains in the Shanghai gold premiums are signaling bargain-hunting buying by Chinese traders/investors.
Other reports have pointed out ongoing central bank gold purchases with estimates for the January and February inflows pegged at nearly twice year ago levels.
Gold ETF holdings declined by 40,515 ounces yesterday and that reduced net purchases to 174,625 ounces. Silver ETF holdings increased by 57,650 ounces but have seen net sales of 4.9 million ounces this year.
While the ramifications of a possible decertification of the AMCU, and an upcoming general election in South Africa haven't impacted gold prices yet, traders should be on the lookout for geopolitical influences from Africa over the coming two weeks. In fact, South African officials are suggesting the AMCU is a militant union and decertification could cause a resumption of strikes which were only settled 11 days ago.
While the dollar will probably remain the key driving force for gold prices, the AMCU has a history of aggressive behavior and with an upcoming election gold miners and mining companies could take hardline stances on issues which in turn could cause output reductions.
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