Gold News

Gold Prices Hit 'Decisive Break' of Technical Support Despite Ukraine Fighting, Ongoing 'Greek Farce'

GOLD PRICES rallied just $5 per ounce from a new 6-week low Wednesday lunchtime in London, bouncing as world stock markets rose despite worsening news and wrangling over eastern Ukraine.
 
Nato chief Jens Stoltenberg said pro-Russian separatists "in and around Debaltseve" are threatening the ceasefire agreed only last week.
 
Ukraine's president Poroshenko left Kiev to visit what he called "the front", while Russia's president Putin urged him to let Ukrainian soldiers surrender to pro-separatists rather than prolong the violence.
 
Greece's new prime minister Tsipras meantime said anti-Russian sanctions are hurting tourism, and were "hypocritical" unless other countries – which have welcomed investment and asset purchases by Russian's super-rich – are also punished.
 
Athens separately confirmed Wednesday that it is seeking a 6-month extension to its current bail-out loans from other Eurozone states.
 
"There's disappointment that the ongoing Greek farce hasn't led to any buying of [this] supposed safe haven commodity," says David Govett at brokerage Marex Spectron in a note on gold prices.
 
With Chinese markets now closed for the Lunar New Year holidays, "The absence of Asia over the next week has removed a lot of potential physical demand," Govett adds, "and I think some players took advantage of thin conditions to push the metals through support, hitting stops as they went."
 
Gold priced in Dollars today ticked higher to $1209 after what one technical analyst called Tuesday's "decisive break of recent support" at the 100-day moving average.
 
"Both momentum and trend signals are bearish," that note from London market-maker Scotia Mocatta's New York office goes on, "and we look to further weakness."
 
"Gold is retracing the past month's up move," agrees technical analysis from French bank Societe Generale, "and should slide further towards the key support zone of 1200/1194," also pointing to the 61.8% retracement of November-to-January's rally, "and the support line drawn from early December."
 
"Failure to hold over [that] uptrend at $1196," says a weekly note from Germany's Commerzbank, "would signal a sell off to $1180 – the June 2013 low."
 
"This guards $1131/46...the lows seen at the end of last year."
 
Quarterly data filed by Paulson & Co. showed the $23 billion hedge fund retaining its top holding of the giant SPDR Gold Trust (NYSEArca:GLD) at the end of 2014.
 
Now unchanged since Paulson & Co. halved its postion as prices sank in mid-2013, those GLD shares are used to back client shares in the investment group's Gold Fund.
 
Tuesday saw the quantity of gold bullion needed to back the GLD's own shares unchanged, despite the 2% price drop.
 
Holdings for the iShares Silver Trust (NYSEArca:SLV) were also unchanged despite the 6% drop in silver prices.

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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