“Gold is just another currency,” well-known investor and newsletter publisher Dennis Gartman told CNBC Tuesday. “It is doing well in other currency terms…I am not a gold bug. I don’t think the world is coming to an end, but I think everyone needs to own some gold.”
The Gold Investor Index, which tracks the balance between gold buyers and sellers on BullionVault‘s exchange, rose to 52.5 last month, up from 52.1 in August. A figure above 50 indicates more individual buyers than sellers during the month.
September saw the European Central Bank unveil its unlimited sovereign bond buying program, Outright Monetary Transactions, while the US Federal Reserve announced an open-ended third round of quantitative easing. The Eurozone crisis also returned to the headlines.
“Private households are continuing to join the bull market,” says BullionVault head of research Adrian Ash. “But the response by retail investors to both QE3 and the latest phase of the Eurozone crisis is more measured…than the recent price action alone might suggest.”
“We do not, at this stage, believe that another significant up move [for gold], that is to say to the $1900 level, will be seen before further consolidation has occurred,” says Axel Rudolph, senior technical analyst at Commerzbank. “The $1815 area may be reached, though.”
Gold prices are up nearly $100 an ounce since the start of September, while the US Dollar Index, which measures the Dollar’s strength against a basket of other currencies, has fallen more than 2% since August 31, the day Fed chairman Ben Bernanke hinted at QE3 during a speech at the annual Jackson Hole conference.
Dollar gold prices hit new 2012 spot market high earlier this week, touching $1791 per ounce, but have been trading in a much narrower range over the last fortnight than they were over the four previous weeks.
“We are going through a bit of a consolidation period,” says Jeremy Friesen, commodity strategist at Societe Generale. “My suspicion is that we’ll get more monetary policy responses from other central banks as the Fed program kicks off and the ECB program starts, probably by the end of this month. That’s bullish for commodities like gold.”