Gold News

Gold hits fresh 7-month high despite Asia and US being closed

Gold hit a fresh 7-month high in Europe today, rising against Dollar, Sterling and the Euro alike.

By the PM Fix in London, gold traded above $670 per ounce, its highest fix since last May – back when gold spiked to a 26-year record versus all major currencies.

"It's largely Dollar weakness," said one professional analysts to the newswires.

"We're going to see more Dollar weakness and if that's the case the outlook for gold is good."

But gold also hit £345 per ounce for British investors today, and took out €510 for Eurozone buyers too.

Today's action came despite a quiet session in Asia – where the Year of the Pig festivities will see Taiwan and China's domestic markets closed for the whole week – plus a holiday for traders in New York.
South Korea and Malaysia will re-open Tuesday. Hong Kong and Singapore will be shut until Wednesday.

Last week's consolidation above $669 – where gold closed New York on Friday – might be further strengthened by US data due this week, reports the Precious Metals Weekly for Heraeus.

"US consumer price data on Wednesday [are] likely to confirm the picture that inflation pressures are easing," write the team's analysts in Hanau, Germany.

A lack of rising inflation numbers should put US interest rates on "hold" for the time being. With the gap between Fed rates and official inflation near multi-decade lows, that's good for gold – click here to find out why...

Looking ahead, "near term support for gold could be between $650-660 before staging the assault to [our] $700 target," according to Standard Bank in Sydney.

The Monex report reckons that "gold support is now anticipated at $663, then $658, and then $646...and resistance [is] anticipated at $673, then $686, and then $700."

Whatever the technical movements in gold this week, the demand-supply dynamics continue to suggest higher prices ahead. Late last week saw the release of the highly respected GFMS data for the World Gold Council.

The report showed total supply dropped 23% in tonnage terms in 2006. Demand rose 8%, meantime. It hit its third running record when measured in Dollar terms.

Back in Asia, China plans to produce 260 tons of gold in 2007, up nearly 20 tons from last year, according to the National Development and Reform Commission (NDRC).

The NDRC also says that China's total gold mine reserves grew by more than 650 tonnes in 2006.

But China's leaders in Beijing know they can't rely on domestic minerals output to meet the nation's fast-growing demand. That's why President Hu Jintao recently visited African leaders to arrange special investment and commodity-supply packages.

For a fuller report – plus expert analysis of China's new currency reserves policy – click here now...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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