Gold Prices Hit 5-Week Low as Stockmarkets Rise, Analysts Get "Ugly" Bearish
Tuesday, 3/25/2014 16:24
GOLD PRICES fell to new 5-week lows in London on Tuesday, hitting $1308 per ounce as Western stock markets rose sharply from a 2-day drop.
With gold prices "unable to break through $1400," says French investment and bullion bank Societe Generale's head of research in Asia, Mark Keenan, "selling has returned to the market and it remains back on track for lower numbers."
Gold prices' "sharp reversal lower last week led to a bearish engulfing pattern on the weekly candlestick chart," says Commerzbank technicial Axel Rudolph, switching his medium outlook on
gold bullion prices to neutral from bullish.
"Heavy selling characterised the London and US sessions [Monday]," says ANZ Bank, "pushing gold prices quickly through a key support level of $1320."
"If we breach the 200-day moving average, currently at $1297, it will get ugly," reckons bullion bank Scotia Mocatta's technical analysts.
Tuesday in China – the world's No.1 gold mining and consumer nation – prices fell 1.5% on strong volume at the Shanghai Gold Exchange, even as the Yuan currency also slipped against the Dollar.
That pushed Shanghai gold back to a discount to international prices, a rare situation now extended for almost three weeks, with Chinese gold prices $4 below London at Tuesday's close.
New data meantime showed China importing a net 112 tonnes of bullion through Hong Kong last month – some 26% more than in January, and twice the tonnage of Jan. 2013.
Because China's GDP growth for the first quarter "is likely to fall short of the government's 7.5% target," Reuters today quotes Naoki Tashiro, president of T.S.China Research, "[Beijing] is likely to take some measures to support the economy."
China's annual gold demand has risen four-fold by value since 2009, when the politburo unleashed
a record stimulus package, reaching $49 billion in 2013 according to data from market-development organization the World Gold Council.
"The outlook for gold looks bearish," says Japanese conglomerate Mitsubishi's analyst Jonathan Butler, noting last week's revised forecast from the US Federal Reserve about "[a] possible rise in interest rates soon after the QE tapering is done."
Silver today followed gold prices lower, hitting its lowest level since early February below $20 per ounce, a price breached on the way up in August 2010.
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