Bullion dealer Sharps Pixley links Italian gov’t bond spread to rise in gold price

Comment from London-based precious metals dealer Sharps Pixley this morning notes that the price of gold gained another 1% even as pricing on Italian government bonds drifted close to the rate at which Greece was forced to seek assistance.

Ross Norman, Sharps Pixley chief executive, said that italian government 10 year bonds were being priced at 6.6%, close to the 7% level at which Greece first looked to the ECB and IMF for help.

Norman said that although the crisis in Europe could be solved mathematically, there was a lack of political will to make it happen. This increased the chances of Europe requiring further quantitative easing measures.

Gold is still 10% off its all time high of $1,920 seen in early September, when COMEX futures traders took profit. But Norman adds that figures published by the CFTC, the US Commodity Futures Trading Commission, on Friday 4 November, suggested that these traders are rebuilding long positions.

Additionally, ETF investors only sold 1% of their total gold holdings, suggesting that many of them are “in for the long haul.”

The next resistance point is $1,772 per ounce, which Norman said could see gold in the “low $1,800s where it belongs.”

“This being the seasonally strong quarter for gold buying, the tide is very much in favour of the gold bulls at this time.”

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