Gold News

Gold Price Escapes New Commodities Plunge as China's Imports Fall, Anglo American Sacks 2/3rds of Workforce

GOLD PRICES escaped the worst of a fresh slump to new multi-year lows in other commodities Tuesday, whipping between $1070 and $1080 per ounce as weak Chinese trade data and the cancellation of major miner Anglo American's dividend to shareholders saw world stock markets drop up to 2.5%.
 
With iron ore prices falling below $40 per tonnes for the first time since 2007, Anglo American (LON:AAL) also said it's cutting two-thirds of its 135,000 global headcount.
 
China's balance of trade surplus meantime showed a rise in Yuan terms for November as imports fell faster than exports.
 
European crude oil's benchmark Brent contract hit 7-year lows beneath $40 per barrel.
 
Silver failed to rally with gold prices from an earlier low, retreating to $14.10 per ounce – the level from where it jumped to near 4-week highs above $14.60 starting Friday.
 
"Large divergence" in the gold price's relative strength index of recent daily moves "points to a loss of downside momentum," says the latest Bullion Technicals Weekly from German bank Commerzbank's analyst Karen Jones.
 
"[That] implies a corrective rebound near term."
 
Looking gold's drop and rally from fresh 6-year lows last week at $1046 per ounce, "We think that some professionals have been caught short," adds one Asian trading desk, "and would expect there to be a bit more topside pain to come.
 
"A test of $1100...will be critical going into the end of the year."
 
Last Friday's jump was "a very large short covering rally," agrees David Govett at brokerage Marex Spectron in London, calling the squeeze "long overdue [to get] rid of a lot of the stale and weaker shorts in the market.
 
"Unfortunately it also prompted some buying by those excited by the rally...There is still no good reason to be long of precious metals."
 
Trading volume in Shanghai's main gold contract almost halved today from Monday's 4-month high as Yuan prices gave back half of yesterday's 5.6% jump.
 
Compared with London quotes however, Shanghai gold rose to a $3.70 per ounce premium, incentivizing new imports from the world's central wholesale hub.
 
China's gold bullion imports are not clearly shown by its official world trade data.
 
Bullion exports are officially banned, but crude 'semi-manufactured' gold items are known to move through Hong Kong.
 
Gold smuggling to India – the world No.1 consumer market so far in 2015, just overtaking China again – rose as a direct result of the previous government's anti-import rules, the parliament in New Delhi was told today by minister of state for finance Jayant Sinha.
 
With the current administration hoping India's wealthiest temples will put some of their gold holdings on deposit with commercial banks to give its "monetization" scheme a PR boost, the Mumbai-based India Bullion & Jewellers Association (IBJA) said today it wants to launch the country's first electronic trading platform for physical gold by mid-2016.
 
"There is a need for an exchange that will cater to small jewellers' demand," Reuters quotes Kumar Jain, vice president of the Mumbai Jewellers Association.

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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