World Gold Council: Gold’s long-term price trend is maintained during Q1 2012

As we try and remind people, especially during periods of frustration on the gold market, it’s all about taking a step back and looking at the bigger picture sometimes.

And to help that process the World Gold Council have released their analysis of the gold market in the first quarter of 2012. The main take-away from their analysis is that gold’s long-term price trend is maintained – this despite the smash we got in gold during the month of March.

From the release:

Q1 2012 saw the gold price rise 8.6% to reach US$1,662.50/oz on the London PM fix by quarter-end on 30 March (Chart 1). The average price for the quarter was marginally higher than Q4 2011 (+0.2%) and 22% higher on a year-over-year basis, as drivers of gold demand and supply continued to support its long-term trend. This performance was echoed in all major currencies. Local Japanese investors benefited the most as a weaker yen on investment outflows for foreign acquisition and a Bank of Japan commitment to quantitative easing saw gold rise 16.1% in local currency terms.

Q1 2012 was characterised by generally strong performance across multiple asset classes such as equities and commodities supported by a number of factors including broad-based strength in US economic data, ECB support for European banks through its longer-term lending programme, upward pressures on oil prices and portfolio re-allocation, primarily among fund managers.

[emphasis ours]

They add:

There was greater economic optimism in Europe during Q1, but perhaps due to a sense of relief that the worst had passed. The ECB’s recent liquidity infusion for European banks (known as the LTRO – long-term repo operations) alleviated a potential credit crunch and indirectly lowered the debt servicing costs of troubled euro area economies. In addition, a second bailout for Greece – announced in the eleventh hour – averted a messy default, but has set the country on what is likely an unsustainable path of austerity. Gold is a proven hedge against both strong asset devaluation and potential inflation, and both risks will remain prominent as euro area sovereign issues remain.

[emphasis ours]

Performance of gold:

(click for sharper image)

Link to this article: : http://www.goldmadesimplenews.com/gold/world-gold-council-gold%e2%80%99s-long-term-price-trend-is-maintained-during-q1-2012-6698/

Posted by on Apr 19 2012. Filed under Analysis, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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