Weekly Review For Gold Investors – noticeable opportunity for buyers to return to the market, which should send gold higher

Gold closed the week at $1,183.16 up $24.61 per ounce (2.12%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 0.45%. The U.S. Trade-Weighted Dollar Index lost 2.40% for the week.

Gold traders are the most bullish since the week ending January 2, according to a Bloomberg survey. This shift in sentiment is primarily the result of the dovish tone from the FOMC this week. Gold had a constructive rally in the back half of the week after the Federal Open Market Committee (FOMC) highlighted the weak inflationary pressures facing the economy and lowered its projections for interest-rate increases. Despite the Federal Reserve removing the “patient” language from its statement, investors feel we are further from a rate hike than previously anticipated.

As of Monday, total holdings in gold-backed funds fell to 1,638.4 tonnes. Investors sold their holdings for each of the prior 14 days, making it the longest selling streak in over a year. Of course, as much of the selling was in anticipation of the Fed meeting, investors should feel more confident about returning to the market. On Tuesday, platinum prices were at the lowest level since July 2009.

As negotiations near, the Association of Mineworkers and Construction Union stated it will have solidified its demands by the end of March. The union, which was behind South Africa’s longest mining strike last year, emphasized its pessimism regarding the upcoming negotiations.

Since the fall in the net-long position is nearing recent bottoms over the past year, the Fed’s dovish read on the economy has set up a noticeable opportunity for buyers to return to the market, which should send gold higher.