Gold News

Gold Price Recovers $1320 After Weak US Home-Building Data, "Worried Fed" Could Spark "Another Leg Higher"

GOLD PRICE losses of $5 per ounce in Asian trade were reversed in London Wednesday morning, with the metal regaining $1320 as new data showed new US house-building falling below analyst forecasts during January's poor weather.
 
With minutes from the Federal Reserve's latest policy meeting due for release later today, "If the weather starts to thaw out and we still see activity struggling," says a note from US brokerage INTL FCStone, "this will undoubtedly get the attention of a worried Fed and perhaps lead to another significant leg higher in gold prices.
 
"But we are not there just yet."
 
Despite falling from Monday's early 3-month high above $1330, says Germany's Commerzbank in its daily commodities note, the gold price "remains above the important 200-day moving average."
 
Physical silver prices in London meantime outpaced gold, rising back towards Monday and Tuesday's spikes just shy of $22 per ounce.
 
Asian equities rose Wednesday, but European stock markets fell. Major government bond prices rose, nudging 10-year US yields back below 2.70%.
 
Italian bond yields held near 8-year lows as the centre-left Matteo Renzi, named as prime minister by President Napolitano, met for a second day with other political leaders, including ex-prime minister and convicted tax evader Silvio Berlusconi.
 
Speaking to BNN TV on Tuesday, "We thought the gold price could spike up to around $1320 in February or March," said New York consultancy CPM Group's Jeffrey Christian.
 
"We're there, and we think you'll see some profit-taking over the next couple of weeks," he added, forecasting a gold price trading range of $1220-1320 for the next two months. 
 
China's wholesale premium, over and above the global gold price, retreated Wednesday below $3 per ounce as Yuan gold ended the day almost unchanged at the Shanghai Gold Exchange.
 
Trading volume in the most active Shanghai contract fell to a 1-week low. But equal to $1.2 billion, it still outpaced recent averages.
 
In contrast to Tuesday, when Australia's ANZ Bank reported "solid physical buying" in the Asian session, "Selling was seen from the outset" today says Swiss refining and finance group MKS, "pressuring gold and silver lower.
 
"The selling persisted...before some light demand from early Europe helped the gold price recover."

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.

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