Gold News

Gold Price Pops Over $1200, "Sell" Say Analysts But Shanghai Trade Solid After Post-2013 Crash Record

GOLD PRICES slipped back from new 3-week highs above $1200 Tuesday lunchtime in London.
 
Gold retreated 1% to $1193 per ounce as Western stock markets followed Japan higher on news of a "snap" election in Tokyo, called after yesterday's data showed the world's third largest economy falling back into recession.
 
New US data today showed producer prices – excluding energy and food – rising 1.8% year-on-year in October, the fastest pace since this spring's near 18-month high.
 
US Treasury bonds ticked higher in price Tuesday, nudging interest rates down, other major government bonds rose faster, widening the extra return offered by Washington's debt.
 
The Dollar meantime failed to rise near this month's two-year highs against the Euro, or top today's earlier 7-year high vs. the Yen.
 
Commodities slipped 0.5% as a group, while silver lagged the rise in gold prices to trade below last week's finish at $16.31 per ounce.
 
"Gold has shrugged off the impact of a stronger Dollar in recent days," says US broker INTL FCStone's Ed Meir, citing the move higher to "modest short-covering and growing expectations about further easing being pursued by global central banks."
 
Tuesday morning's rally "triggered some stops", says a London dealing des.k, referring to pre-set orders to sell at a certain level.
 
"Personally," says David Govett at London brokers Marex Spectron, "I would be looking to sell any rally above $1200, with a view to the market coming lower again over the next few weeks."
 
Still targeting $1100 or below over the next 1-3 months, technical chart analysis from French investment bank and London bullion market maker Societe Generale meantime says gold prices have "re-established above the key level of 1180" – the low of June and Dec. 2013 as well as October 2014.
 
But gold is only "undergoing a corrective rebound," SocGen adds, targeting $1213 "and possibly $1235/40" before falling again.
 
Fundamentally, "Gold is still in the process of unwinding the craze that it enjoyed from 2000 to 2011," reckons Doug Ramsey of $1.6 billion asset manager the Leuthold Group.
 
"It was the commodity that got the public enamored and went up and topped over $1900, and that whole process of deflating that excitement that built up over 11 years is still in process."
 
Meantime in China, the world's No.1 producer, consumer and importer of gold in 2013, the Shanghai Gold Exchange today said it is cutting the margin downpayments it requires from traders by 1%, Reuters reports.
 
Trading volume in Shanghai's main gold contract today equaled $0.9 billion, in line with the last 3 months' average but more than halving from Monday – the busiest day in Shanghai gold trading since the Gold Price Crash of April 2013.

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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