Commerzbank see gold rising on higher inflation expectations

New York (Oct 25)  Commerzbank commodities analyst Daniel Briesemann noted that gold is being lent buoyancy by the rising inflation expectations, in his latest daily commodities report. He added that "market-based inflation expectations in the US temporarily reached a nine-year high of almost 2.7% on Friday. The long-term inflation expectations in the Eurozone (for five years in five years) exceeded the 2% mark for the first time in seven years. The markets are pricing higher inflation in more and more, in other words, and many market participants clearly believe that the current high level of inflation is no longer merely temporary."

When looking forward he said "Gold should profit from this in its role as a store of value. Gold also benefited on Friday from the fact that the technically important 100- and 200-day moving averages were exceeded, which probably sparked technical follow-up buying. ETF investors still appear to have no confidence in gold and speculative financial investors have likewise not been betting significantly on rising gold prices of late, according to the CFTC’s statistics. That said, they have expanded their net long positions in silver considerably, increasing them nearly four-fold to 19,400 contracts in the week to 19 October."

When it comes to some other precious metals Briesemann noted "This also explains why silver has noticeably outperformed gold in the period under review, driving down the gold/silver ratio. Speculative financial investors have become more optimistic about platinum, too: the CFTC statistics show that positioning here is net long again for the first time in 13 weeks. The platinum price has climbed in absolute terms of late, but has not gained any ground vis-à-vis gold. On the contrary, the price gap between the two precious metals has widened again."

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