According to ETF Securities gold has started trading just above the estimated cost of production at $1,100 per ounce, which means a natural floor to the precious metal may have been reached. This means that investors are able to get in at a low price.
Nitesh Shah, Associate Director – Research and Nicholas Brooks, head of research and investment strategy at ETF Securities said: “Commodity ETPs saw their largest inflows in six weeks, with bargain-hunters attracted by depressed valuations. Several commodities including Brent, platinum, palladium and most industrial metals rose last week rebounding on the back of the better investor sentiment toward commodities. With many commodities trading so close to their marginal cost of production, we believe that prices cannot fall much lower without triggering a supply response. Better-than-expected GDP and industrial production data from China, the world’s largest consumer of commodities, also helped boost cyclical commodity prices.”
Drew Voros at Hardassetsinvestor.com said yesterday that gold was trading flat in the morning ahead of the FOMC meeting. “Edging up by $0.67, or 0.05 percent, to $1,231.56.”
It was followed by the London Bullion Market Association (LBMA) announcing earlier this month a shortlist of eight companies who are in the running to replace the traditional over-the-phone gold fixing process in a bid to improve price transparency of the precious metal.