Gold Price Hits 3-Week High as Asian Shares Slump, China Premium Jumps on New Year Demand
Monday, 1/06/2014 15:10
GOLD PRICE gains of $10 per ounce were trimmed Monday morning in London trade only to run higher again, with prices nearing new 3-week highs above $1246 as Western stock markets slipped.
Asian shares had earlier sunk to their lowest levels since mid-December after new data showed growth in China's services sector slowing hard.
Gold price premiums in Shanghai, which began December at $6 per ounce, jumped today to $16 per ounce above international benchmarks according to Standard Bank.
With the Chinese Lunar New Year set to mark a peak season for household gold demand at the end of January, "I admit that gold was a bad investment choice last year," the
China Daily quotes one middle-aged housewife shopping for gold in Beijing.
"But I buy gold for my child, even for my grandchild, not for speculation."
"It is a good deal," says another shopper in another busy gold store. "It can be seen as
an investment when gold prices go up in the future."
Looking at 2013 gold price action overall, "The average price decline isn't as dramatic," Al Arabiya News today quotes Jeffrey Rhodes at Rhodes Precious Metals Consultancy DMCC in Dubai.
Compared to the 29% drop between New Years, the annual average gold price "is down by about 15%...certainly
not as gloomy as you would have thought."
More recent gold "price action is quite encouraging," says a technical analysis from ScotiaBank's sales desk in New York.
"Last week's candle was an 'inside week' or 'Harami' which means 'pregnant' in Japanese," because prices moved only inside the high and low of the previous week's range.
"Big picture, the inability to break [beneath] the 2013 low at $1180 is encouraging."
Also looking at technical analysis of the gold price, "The recent December double bottom just above the 2013 lows of $1180 has spooked shorts and rightly so," says refining and finance group MKS, citing bearish traders closing their positions for the last week's 5% rally.
But "Although things look better today than they did last year," says David Govett at London brokers Marex Spectron, "this is not the beginning of a major move for gold.
Gold price moves "are still range bound," says Govett, "in the same way we have been for a while" between $1200 and $1300.
Meantime in India – where the local gold price stood at a premium of $130 per ounce to the world's London benchmark – the Reserve Bank today
invited refineries to import up to 15% of their 2014 allotment in just the first two months of the year.
With this seen as an "easing" of restrictions by some journalists, officials are also discussing a cut to the former world No.1 gold consumer country's import duty of 10%, according to Reuters, widely seen as crushing imports by 90% in the second-half of last year.
Similar rumors about
India cutting gold import duty last month were swiftly denied, however, again by un-named but apparently "senior" government sources.
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