Gold heading towards USD 1,600

- "The Fed's decision to reinvest the proceeds from maturing and prepaid agency debt and MBS in longer-term Treasuries and to continue rolling over its holdings of Treasury securities as they mature has eliminated the slight tightening bias of US monetary policy."
- "Thus far, it is not yet clear whether this will now also result in a lengthening of the Fed balance sheet. In the past, however, the gold market reacted extremely positively to a monetization of government debt."
- "In the second quarter of 2010, demand for gold measured in tons increased by 34% yoy. On a USD basis, a new record was even posted for the quarter. The reason for this is the surge in investor demand triggered by the Fed decision and the renewed widening of CDS spreads in Europe."
- "In the interim, a growing number of Chinese investors is also discovering the gold market. Although China has advanced in recent years to become the world’s largest gold producer, its annual production of most recently 330 tons is by no means sufficient to satisfy this demand."
- "Hence, China announced key gold market reforms at the beginning of August. Foreign companies are now permitted to offer their gold coins at the Shanghai Exchange, and more banks are permitted to import gold from abroad. The Chinese demand will now increasingly be felt on the global markets."
- "We are, therefore, raising our target price for 2011 from USD 1,250 to USD 1,400 per troy ounce. For 2012, we now expect USD 1,600 per troy ounce (in each case calendar year averages)."

Unicredit Commodity Outlook 20100906

No comments:

Post a Comment