Investor Sentiment for Gold at Six Month High

November 6, 2013 at 08:48


Investor sentiment towards gold rose to a six-month high in October, following a slew of outflows from the precious metal earlier this year.

According to the latest BuillionVault Gold Index, which measures the balance of people adding to and reducing their gold holdings, sentiment rose to 54.3 last month, from 53.0 in September.

A reading of 50 would indicate and equal number of net buyers and sellers.

The figure is still down on its September 2011 peak of 71.1 though, and even a year ago sentiment was more positive at 56.0.

Adrian Ash, head of research at BullionVault, says the increase may have been sparked by uncertainty in the US. ‘Washington’s short-term fix to the debt ceiling confirms there’s no will to tackle spending or money printing long term. October’s drop in the gold price let savers build their insurance at lower costs,’ he explains.

Angelos Damaskos, manager of the Junior Gold fund, agrees that ongoing macro- economic problems should have a positive effect on gold.

‘The macro situation has not changed much: there are still fiscal problems budget deficits, the US debt ceiling and high unemployment, and these things encourage politicians to continue to print money and carry on with quantitative easing in order to reduce their debt. That should push the gold price higher,’ he says.

Currently he says investors in the Far East are very positive on the yellow metal, seeing recent large outflows from ETFs, which have caused a price drop, as a buying opportunity. Elsewhere he says ‘there is a still a lot of catching up to do’ when it comes to sentiment, but that ‘we may be at a turning point’.