Gold News

Gold Investing Rebounds in the West, Slips 10% in Asia, Price Hits 3-Month High vs. Weak Dollar

GOLD INVESTING prices hit 3-month highs against the Dollar in London trade Thursday, peaking above $1227 per ounce as the US currency sank again.
 
World stock markets rose, jumping at the start of New York trade, while commodities edged higher but Eurozone government bonds fell in price once more.
 
Funds investing in German Bunds saw prices drop to new 6-month lows, with 10-year yields hitting 0.77% per annum.
 
Greek government bonds fell harder, pushing 10-year yields up 0.27 percentage points after Athens' finance minister Yanis Varoufakis said the country's debt is "unsustainable" and asked to delay repaying bail-out money to the European Central Bank " far into the distant future."
 
The Euro peaked at new 3-month highs vs. the Dollar however, rising above $1.14 and curbing the gold price for Eurozone investors to 1.4% gains for the week so far at €1076 per ounce. 
 
For US investors on the other hand, "Gold has managed to break above its 200-day moving average [at $1218]," says Leon Westgate at Chinese-owned ICBC Standard Bank, "helped by a weaker Dollar.
 
"The key will however be whether gold can dig its heels in," Standard's note says, pointing to "resistance at the $1226 mark formed by a Fibonacci 50% retracement" of the January-to-March 12% drop.
 
"We see April's high of $1225 as the next key level," agrees market maker and LBMA Gold Price participant Scotia Mocatta in a technical analysis, also pointing to "the April reaction high and the 50% correction of the January to March down move of $1305 to $1143."
 
"A break above $1222-25 provides the opportunity for a dash to $1260," reckons an Asian trading desk.
 
New data compiled for today's Gold Demand Trends report from market-development organization the World Gold Council meantime put China's total 2014 demand 20% above the figures first published last year.
 
But while Asian investment demand for retail gold bars and coins was still twice the total demand of Western Europe and North America combined, it fell 10% in the first quarter of 2015 from the same period last year.
 
Gold investing demand amongst Western households, in contrast, rose 10% on the new data, produced by London-based consultancy Metals Focus.
 
Gold prices in Shanghai closed Thursday at 2-month highs in Yuan terms. But a surge in the Chinese currency vs. the Dollar on the FX market turned this week's small premium for Shanghai gold – over and above quotes for settlement in London – into the first discount since early April, equal to some 50 cents per ounce.
 
"The rampant strength of the [Chinese] equity market is clearly diverting attention away from gold," Reuters quotes World Gold Council head of market intelligence Alistair Hewitt, who now forecasts that China's gold demand will equal India's in 2015, having beaten it the former world No.1 two years running.

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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