sure, gold still has its friends. Demand for physical gold and physically backed investment products is strong, with the amount of metal held by gold exchange-traded funds, which issue securities backed by physical bullion, rising to a record highs in recent months.
Gold coin demand, which fell in the first three quarters of this year after rising to nearly 40 million ounces in 2011, is also showing signs of recovery. US Mint gold American Eagle sales posted its strongest November for 14 years last month.
Physical demand in India, though sharply lower this year, is holding up surprisingly well given the weakness of the rupee, which makes the metal more expensive for other currency holders.
But a return to gold at $1,900 an ounce and above is likely to require a stronger driver than those gold has so far seen.
“What is likely to push gold prices higher than the previous spike?” Sector Investment Managers’ Angelos Damaskos said. “It could be a major crisis in the euro zone; if in the new year we find the new restructuring package for Greece is not enough, and Greece requires a new bailout; if we find Spain requires other money; if there are other big issues in the euro zone.”