Gold News

Gold Bullion Hits Triple-Low Near $1180, Sentiment at "Rock Bottom" on Absent China, Rising Dollar

GOLD BULLION rallied 1.3% in London from new 2014 lows against the Dollar on Monday, bouncing after a hard sell-off at the start of Asian trade drove it back to 2013's double-bottom near $1180 per ounce.
 
"The strong Dollar is a major problem for gold," Reuters quoted Hong Kong dealer Ronald Leung at Lee Cheong.
 
"Sentiment is very bearish...There's a little bit of physical buying, but [Asian] premiums [above world prices] haven't changed."
 
Silver prices today tracked gold lower and higher, bouncing from new 4.5-year lows at $16.75 per ounce after data released Friday showed speculative traders in Comex futures and options holding a record number of bearish bets against the metal, with open interest in silver overall hitting near-record levels.
 
"Sentiment indicators" in the gold bullion market "are at rock bottom levels," agrees the latest quarterly letter to precious metals fund clients from Tocqueville Asset Management, pointing to the lowest reading in 8 years on one sentiment index, and the second lowest since 1984 on the Hulbert Gold Newsletter Sentiment Index.
 
"These are cheery numbers to a contrarian," says Tocqueville's commentary, " reminiscent of the low regard held for gold in the late 1990s."
 
With the key Asian markets of China, Singapore, India, Malaysia and the Philippines closed today for holidays, "Gold was under pressure immediately" at the start of Monday's trade, notes Swiss refining group MKS.
 
Following Friday's sharp drop – when precious metals prices were "pummeled" after better than expected US jobs data according to another analyst – "Friday night's low failed on the open and we had the yellow metal trading down towards the December 2013 low.
 
"Continued US Dollar strength will have the December as well as June 2013 low of $1180.50 under pressure in the short term."
 
"[Only] two things stand in the way of more Dollar strength," says Standard Bank's forex strategist Steven Barrow – "the market's own exuberance and the October 2-29 Federal Reserve meeting."
 
"Market focus," says London market-maker Barclays' analyst Suki Cooper, "will now shift towards the extent of strength in Chinese gold demand after the national holiday."
 
With its financial markets due to re-open Wednesday after the long National Day holidays, China should expect to see economic growth miss Beijing's 7.5% annual target for the next 3 years, the World Bank said today.
 
"One striking fact," says Kenneth Rogoff, formerly chief economist at the IMF and now professor of economics at Harvard University, "is that annual growth in electricity demand has fallen sharply, to below 4% for the first eight months of 2014, a level recorded previously only in the depths of the global financial crisis that erupted in 2008."
 
The world's second-largest economy, China overtook India in 2013 to become the largest consumer and importer of gold bullion.
 
Pro-democracy protests in Hong Kong meantime focused Monday around government buildings, but local officials said they had no immediate plans to clear access.

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.

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