Gold has been trading sideways in Asian trading and remains in a tight range in Europe this morning near $1,656.07/oz. Gold remains supported this morning as the ECB signaled that it would intervene in the debt markets on worries about Spain.
This morning, the meltdown continued in gold, but this time, unlike during yesterday’s after-hours electronic trading, silver and the noble metals joined gold and fell hard as well. Once again, the only green color to be seen was the net change in…the greenback.
Gold has broken below recent support at $1,640/oz. and reached as low as $1,632.45/oz. this morning – below its recent low and its lowest price since January 16. Gold looks like it will go lower on technical weakness and the next level of support is $1,600/oz.
Proving for the nth time that what happens in China is a pivotal impact factor to the commodities’ space, the most recent developments in that country sent base and precious metals prices, along with most global equity markets, lower overnight.
Analysis of the platinum group metal (PGM) markets looking at traditional supply and demand fundamentals does not explain the price levels for these metals today. Only when investment inflows are taken into account does the picture become clear.
Investors should reign in expectations of more stimulus being unleashed in China during the early part of 2012. Instead of speculating on Chinese stimulus programs, investors should take notice other trends in the precious metal bull market.
Spot gold has consolidated gains above the 200 day moving average at $1,640/oz. Gold has climbed 1.5% to a one month high, due to concerns about the euro-zone sovereign debt crisis. Risk appetite has returned lifting markets across the board.
Gold prices traded with muted gains ranging from almost unchanged to roughly seven dollars and with bids coming in mainly around $1,635 to $1,645 in early action after yesterday's rally in part helped by robust Chinese gold import data.