Gold News

Gold Trading 'Bullish' at $1180 as China Challenges Trump Over Taiwan, Mexico

GOLD TRADING saw prices again outpace the rising US Dollar on Monday, nearing Friday's 4-week highs above $1180 per ounce as world stock markets fell, government bond prices rose, and crude oil sank more than 2%.
 
"Short term gold is staging expected rebound," says a new technical analysis from French investment bank and bullion market maker Societe Generale, with its "initial target at $1181" now achieved while "$1200 remains a key resistance."
 
"Resistance is at $1191," counters the latest trading analysis from Canada-based bullion bank Scotia Mocatta's New York office, calling gold prices "bullish [as] momentum remains positive" with $1165 offering "near-term support".
 
New data released Friday evening said that hedge funds and other money managers trading Comex gold futures and options came into 2017 only slightly more positive as a group on than end-December's 11-month low.
Chart of CFTC's Commitment of Traders data for gold, Managed Money category
 
"The yellow metal continues to benefit from physical demand," says Swiss refining and finance group MKS in a trading note, pointing to "Asian interest and a pull-back in ETF outflows" after the relentless exchange-traded trust fund liquidation of gold following Donald Trump's victory in November's US presidential election.
 
Again attacking global auto-makers which import vehicles to the US market on Twitter today, Trump has acknowledged intelligence reports claiming that Russian hackers had attempted to interfere with November's elections, according to a spokesperson.
 
Russia's crude oil output fell by 0.9% so far in January, sources quoted by Reuters claim, in line with Moscow's commitment to assists the Opec oil cartel's lower quotas, aimed at supporting prices.
 
US production continues to rise however, with the Baker Hughes count of oil rigs rising last week to 665, the highest since end-2015 and two-thirds larger than last June's 7-year low.
 
"If Trump reneges on the one-China policy after taking office," says Beijing-controlled website Global Times meantime, commenting on Taiwan leader Tsai Ing-wen's contact with the US president-elect, "the Chinese people will demand the government to take revenge. 
 
 
Global Times elsewhere says that Trump's series of tweets warning auto-manufacturers to build cars for the US market in the US " a valuable opportunity for Chinese automakers to expand into Mexico."
 
Shanghai gold premiums rose Monday back towards $20 per ounce, offering a sizeable incentive to new imports ahead of the key Chinese New Year holidays.
 
The People's Bank failed to add any gold to its bullion reserves for a second month running in December, new data showed meantime, passing up the metal's 10-month Dollar discount as capital outflows saw China end 2016 with a drop of almost 10% in its official reserves of foreign exchange assets, down to a 5-year low of $3.01 trillion.
 
Meantime in India – former No.1 gold consumer nation, now set to report tax revenue from gold imports down by one half in 2016 – lenders are reporting a rising default rate amongst borrowers using gold as collateral to secure cheaper rates, a sign of economic stress amongst middle-class families following the shock demonetisation of the country's largest banknotes in November, according to The Hindu newspaper.
 
The sudden cancellation of 86% of currency in circulation – aimed at killing forgeries, so-called 'black money' and tax evasion – has also hit India's digital economy, according to Money Control, as "private funding dried up for unlisted players [and] the listed players are expected to be impacted by demonetisation."

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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