Gold News

Gold Bullion Rises Above 200-Day Average, Nears $1320 as Dollar Falls, Best Run in 2 Years on Strong China Volume

GOLD BULLION prices slipped $5 per ounce from a new 15-week high just shy of $1320 per ounce in London trade Friday lunchtime, extending the metal's 11% rise for 2014.
 
Asian equities edged higher overall but closed the week 5% below where they started the year on MSCI data.
 
Germany's Dax with the Euro currency to a 3-week high after new data showed the 17-member Eurozone outpacing analysts' forecasts for 2013 with GDP growth of 0.5%.
 
The British Pound jumped above $1.67 – its highest level since May 2011 – to curb the price of gold bullion for UK investors at a 12-week high just below £790.
 
"Gold has traded through its 200-day moving average," says today's commodities and bullion note from South Africa's Standard Bank, pointing to a key indicator for gold-chart analysts.
 
"Technically, this is bullish. The last time the metal moved above its 200d MA was in August 2012...when it rallied from $1646 to $1794."
 
Rising Friday for the sixth trading session in a row – a run not repeated since just before peaking at $1920 during the Euro crisis, US debt downgrade and UK riots of August 2011 – gold was on track for a 4.6% weekly rise, its strongest since mid-October.
 
Gold prices have now risen in 7 of the last 8 weeks, the longest run since February 2012.
 
Wholesale silver bars meantime caught up and beat gold bullion's strong week, jumping Friday to reach 3-month highs above $21.10 and gaining 6.1% from last Friday.
 
That jump in silver, the strongest rise since mid-August's rebound from 3-year lows at $18.25, helped pull broad commodity indices higher even as crude oil slipped.
 
"The Chinese, true to form," said a note early Friday from Swiss refining and finance group MKS's Asian desk, "were buyers of both gold and silver and we continued to grind higher."
 
Shanghai gold bullion prices rose 1.7% in Yuan terms in strong trade Friday, while premiums to world prices closed Friday back above $6 per ounce.
 
Despite the heaviest trading volumes today since 2nd January, that was down from $10 a week ago, however, when trading resumed after the Chinese New Year holiday.
 
With China's $1.8 trillion non-bank "wealth management product" industry suffering its first default last week, Beijing said Friday that formal bank lending grew 14.1% in 2013 to $11.9 trillion.
 
Non-performing bank loans edged up to 1% by end-December, the regulator said.
 
"Elevated risk aversion, lower US yields, weaker Dollar and strong demand from China have boosted gold demand," says French bank Credit Agricole in a note. 
 
"[But] gold gains are unlikely to be sustained," it says, calling the 200-day moving average strong resistance and pointing to an "improving trend [in] risk appetite [and] well-contained inflation pressures in major economies," plus a rise in the Dollar and US bond yields ahead.
 
"Soon [Western] investors will have to decide whether they are going to give gold another chance," said Swiss bank and London bullion market-maker UBS in a note this morning.
 
"Gold is so far looking comfortable with a $1300+ price tag, amid mixed interest from those who have started to become friendlier...and those who have been waiting for better levels to lighten longs [ie, sell]."

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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