(MENAFN Press) (EMAILWIRE.COM, October 10, 2012 ) San Francisco, CA-
The price of gold bullion almost reached a yearly high last week, and one observer said that central banks might be buying the precious metal.
An increase in U.S. manufacturing and the dollar's decline relative to a collection of major currencies led to some risk-taking, and on Oct. 1 bullion's spot price hit more than 1,790 for an ounce. It had not reached that level since November 2011.
At one point that Monday, almost 4 million ounces traded hands in seconds on the U.S. futures market, dealers told Reuters. Some thought the activity was an indication that central banks were buying, especially considering the dollar's soft long-term outlook.
When the dust settles, asset manager Adrian Day told Reuters, I wouldn't be surprised at all if we learn that central banks have been buying gold over the last couple of weeks.
His firm, Adrian Day Asset Management in Annapolis, Md., manages 200 million in commodities, including gold.
The central banks typically do not tell upfront if they're buying gold, Day said, but they were in the market during the summer, as we belatedly found out, and they could be keeping up with that momentum now.
The World Gold Council said in August that an increase in central bank buying helped make up for a 10% decline in demand for bullion in the second quarter from the first. In the second quarter, bullion ranged from 1,530 an ounce to 1,680 an ounce, but by the third quarter, it gained 11% to trade above 1,787.
The start of October saw a high of 1,791.20, which was the best price since Nov. 14, when bullion surpassed 1,795.
Analysts expect gold prices to be influenced by the euro, which had bounced back against the dollar Oct. 1. But, questions about European finances mean that gold prices could be volatile.
Robin Bhar, a Societe Generale analyst in London, told Reuters, You might see a print above 1,800, but above there, you will get the sellers coming in.