A week of significant trading for GoldMoney customers and a possible turning point in the market

Trading activity by GoldMoney customers jumped 24% above last week’s levels but this was concentrated in gold where trading rose by 72%.  Most activity took place in the run up to the US fiscal resolution on Wednesday since when trading has remained subdued.  Continuing a well-established trend GoldMoney customers have continued to increase their holding of gold and silver in Singapore.  Aggregating activity across all storage locations there was a clear net sell of precious metal but this included a marginal net buy of platinum.

GoldMoney customers hold almost 21 tons of gold in storage worldwide, and together with silver, platinum and palladium own a combined total of US$1.6 billion in precious metals.

GoldMoney’s Head of Research, Alasdair Macleod says this week could mark a major turning point in the market: ‘Last Friday someone dumped a big sell order on the futures market ahead of the US opening, which drove the price down $25 to $1262. On Thursday morning, just before 9.00AM UK-time gold suddenly took off, gaining $40 as the US dollar moved sharply lower, in a considered response to the suspension of the debt limit the night before. That sale a week ago, insofar as it has not been closed out is now showing a large trading loss.

‘There is little doubt that the bears, having failed to see selling materialise on the opening mark-down of $4 on Thursday, suddenly realised how exposed they were when the US dollar suddenly weakened.

‘The result is gold has now broken up out of its short-term downtrend (the dotted line). More importantly, the bears failed to push gold down below the June lows under $1200; so gold looks like it has established two rising low-points, confirming that gold is in an uptrend. This being the case, after a brief consolidation gold has the potential to move swiftly higher to challenge the $1350 level and above.

‘Behind this turn of events is a weaker dollar. There is little doubt that as a brand the US dollar has taken a beating. Not only did the US suffer the indignity of airing its washing in public, not only did a ratings agency threaten to downgrade US Government debt, but also the Chinese through their official news agency Xinhua are calling for an end to dollar and US supremacy. They have backed this up by freezing New York out of the internationalisation of the renminbi, choosing London instead. The full implications of all this have not yet been reflected in financial commentary and will no doubt be debated in the coming weeks.’