Gold News

Demand to Buy Gold 'Buoyant' as 'Robust' Price Gains Ignore China Slowdown Before ECB, Greek Election

BUY GOLD bids pushed wholesale prices to fresh multi-month highs at the start of London trade Tuesday after new data showed China's GDP growth beating analyst forecasts for 2014 but slowing sharply as the year ended.
 
Prices to buy gold then eased 0.7% in Dollar terms – and retreated faster for Euro and Sterling investors – as European stock markets diverged ahead of Wall Street's return from the Martin Luther King bank holiday.
 
The world's second largest economy, China expanded 7.4% in full-year 2014 – the slowest pace since 1990 on official data – and slowed to 6.0% annualized growth between the third and fourth quarters.
 
Chinese gold prices ended Tuesday unchanged in Yuan terms as the stock market bounced from Monday's huge sell-off.
 
But compared to international quotes – and with less 1 month until the peak demand season of Lunar New Year – premiums to buy metal via the Shanghai Gold Exchange fell hard to $2.50 on low trading volume.
 
Western investor demand to buy gold "should remain buoyant ahead of the ECB's meeting on Thursday and the elections in Greece at the weekend," says German bank Commerzbank in a commodities note."
 
With the European Central Bank expected to announced half-a-trillion Euros of QE asset purchases this week according to a poll by Bloomberg, Euro-priced bullion has risen 22% since its November lows, breaking above €1100 per ounce – its highest level since the middle of Spring 2013's historic gold price crash.
 
Gold today peaked at a new 5-month high of $1294 for US investors, extending its gains from early November's 5-year low to 14%.
 
Prices to buy gold with British Pounds have meantime risen 20% since then, hitting 16-month highs above £850 on Tuesday.
 
"Gold has started 2015 in robust fashion," says Asian-focused investment bank Standard Chartered (LON:STAN), pointing to "elevated commodity market volatility and associated macroeconomic uncertainties."
 
"We remain bullish on the yellow metal with next target at $1300," says a technical analysis from Swiss bank and London market-maker UBS.
 
Longer-term, says a technical analysis from French bank Societe Generale, there are "obvious signs of the downtrend slowing.
 
"But [it's] too early to call for a bullish reversal."
 
Dollar gold prices have failed since the Spring 2013 crash to rise for more than two months on the run, SocGen notes.
 
But with prices to buy gold rising both in December and so far this month, two technical indicators are "right under key levels," it goes on.
 
"A further and sustained up move would be enough for them to flip into positive territory."

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.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals