Gold Price "Remains Bearish" Say Analysts, "Retest of $1180" Forecast as China Reports Another 100-Tonne Month
Tuesday, 10/08/2013 13:34
GOLD PRICE gains from Monday were halved in London trade Tuesday morning, with wholesale prices slipping below $1320 per ounce as European stock markets extended their drop and the US government shutdown continued.
Silver fell less than the gold price, edging back towards $22.20 from a new 3-week high hit overnight at $22.46 per ounce.
A new ABC/
Washington Post poll says 70% of US voters "
disapprove of how the Republicans in Congress are handling the budget negotiations," with the October 17th deadline for potential US debt default drawing nearer.
The VIX volatility index on S&P 500 stockmarket options yesterday jumped by 15%, the sharpest 1-day move since June.
Gold price analysis from market-maker Scotia Mocatta said Monday night the bank's traders "are currently neutral" despite yesterday's 1.2% gain, "but would view it as a positive development if gold holds key support at $1273."
"Potential is for a fresh sell-off to materialise soon," counters gold price analysis from fellow market-making bank UBS.
"The bearish outlook remains intact...We expect the yellow metal to test the crucial support at $1180.50, the June 28 low, over the coming days."
Even as the gold price rose 3.7% in August,
gold bullion imports to China from Hong Kong topped 100 tonnes, net of exports, for the fourth month running new data showed today.
Former No.1 consumer nation
India imported only 100 tonnes over July, August and September combined, says local managing director for market-development group the World Gold Council, P.R. Somasundaram.
"Gold recovered in a weak US-Dollar environment [with] few assuring economic data," says the latest Precious Metals Update from German-based refining group Heraeus.
"Still, the short-lived dip in prices led to an increased demand for
gold investment bars."
Focusing on the developed West in contrast, "The investment case for gold relies on the expectation of rising inflation," says analysis from investment bank and bullion market-maker J.P.Morgan, "which in turn relies on growth.
"Yet the US shutdown is damaging US growth, both in direct terms through the furlough of 800,000 government employees and through a host of indirect channels."
Yesterday's move in the gold price came in very quiet trade, with volume in US Comex gold futures reaching barely 98,000 contracts – some 60% of the last month's average turnover.
"[The gold price] will stay supported," reckons brokerage Marex Spectron's head of precious metals David Govett, "as long as the US keeps playing brinkmanship with itself and as the deadline for the debt ceiling approaches.
"[But] interest in the market is pretty low. Once this farce is out of the way, I think [the gold price will] head lower."
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