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Gold Futures Press Higher on Hopes of EU Debt Deal

Strategic Insights

— 1 min read

Gold futures surged on October 24, 2011, as investors grew hopeful about a potential European Union (EU) debt deal. The most actively traded contract for December delivery jumped $18.80, or 1.2%, to $1,654.90 a troy ounce on the Comex division of the New York Mercantile Exchange. This move was fueled by the EU officials' plan to negotiate boosting the region's bailout fund and recapitalizing euro-zone banks until Wednesday. Stronger physical demand in Asia, particularly in India's wedding season, also supported gold prices.

Key Takeaways:

  • Gold futures increased by $18.80, or 1.2%, to $1,654.90 a troy ounce on the Comex division of the New York Mercantile Exchange.
  • Hopes of an EU debt deal led to a surge in gold futures, which moved in line with riskier assets like equities.
  • French President Nicolas Sarkozy and German Chancellor Angela Merkel expressed optimism about the talks, citing progress made at the weekend summit.
  • Gold prices had slumped 11% in September, but the current move is seen as a positive sign.
  • Citigroup increased its forecast for gold prices, expecting an average of $1,950 a troy ounce over 2012, up from $1,650 previously.
  • Physical demand in Asia, particularly during India's wedding season, is expected to support both gold and silver prices in coming months.
  • Barclays Capital's Suki Cooper noted that physical demand is seasonally strong during this period, which may contribute to higher prices.

Statistics:

  • Gold futures increased by 1.2% to $1,654.90 a troy ounce.
  • The October-delivery contract rose $19.10, or 1.2%, to $1,654.20 a troy ounce.
  • Citigroup expects gold prices to average $1,950 a troy ounce over 2012, up from $1,650 previously.
  • Silver prices are expected to average $32.90 a troy ounce over 2012, up from $26.00 a troy ounce.
  • The bank sees gold prices averaging $1,745 a troy ounce in 2013, up from $1,500 previously.
  • Silver prices are expected to average $27 a troy ounce in 2013, up from $22.40 previously.

Sources:

  • Dow Jones Commodities News via Comtex
  • Dow Jones Newswires
  • FuturePath Trading (Frank Lesh)
  • Barclays Capital (Suki Cooper)
  • Citigroup (anonymous analyst)

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