Gold News

Bullion Jumps as EM Crash, But Dash to Buy Gold Fails to "Explode" Above $1270

BUY GOLD bids drove the price up to 2-month highs Friday morning in London, as a sell-off in emerging markets accelerated ahead of next week's US Fed meeting, when the central bank will vote on "tapering" its now $75 billion of monthly QE.
 
Global investors this week pulled $2.5 billion from emerging-market equities says Reuters, pointing to EPFR data.
 
Buenos Aires' Merval index yesterday reversed Wednesday's 2% gains, made as Argentina's Kirchner government let the Peso's official value slump 15% to new all-time lows vs. the Dollar.
 
The Turkish Lira hit new all-time lows Friday morning, while the Borsa Istanbul dropped 2.6%.
 
"Gold has established itself into a new short-term and volatile range," says technical chart analysis of prices to buy gold futures from French investment and London bullion bank Societe Generale.
 
Pointing to gold's "up sloping channel...1268 remains a pivotal resistance," says the note.
 
"If gold can break the recent $1268 high," agree gold chart analysts at fellow London market-maker Scotia Mocatta, "and hold it into [Friday's] weekly close, it will substantially improve the outlook."
 
Writing Thursday, "Gold gets explosive above 1270. Watch out," said Bank of America-Merrill Lynch technical analyst MacNeill Curry.
 
"A break of the 1270 [level] should be the catalyst for short squeeze higher," he wrote, predicting that rising prices would force bearish traders to buy gold futures to close their bets at a loss.
 
Spot gold peaked Friday morning in London at $1272.60 before easing back $4 per ounce.
 
"The US stock markets has had an unusually sloppy January," says US brokerage INTL FC Stone's Thursday night note.
 
This "may have revived interest" amongst investors to buy gold.
 
What London brokers Marex Spectron call "a raft of figures from the US" may have caused traders and investors to doubt next week's QE taper by the US Fed. Because "the recovery is not steaming full speed ahead."
 
Meantime in Asia overnight, premiums to buy gold in Shanghai over and above London prices fell to a new 2014 low beneath $8.50 per ounce, even as Yuan prices rose on strong trading volumes.
 
Indian premiums to buy gold collapsed, according to local reports, falling 30% – and halving from December's record of $130 per ounce – on fresh talk that the ruling coalition may ease its anti-import rules before the national elections in May.
 
Making it easier for households to buy gold, however, must start with a change to the 80:20 re-export rule notes UBS analyst Joni Teves.

Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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