Gold Challenges Resistance at $1,750/oz – Technicals and Fundamentals Remain Very Positive
Gold’s London AM fix this morning was USD 1,747.50, EUR 1,326.68, and GBP 1,102.80 per ounce. Yesterday's AM fix was USD 1,744, EUR 1,327.65, and GBP 1,106.74 per ounce.
Gold has seen quite volatile up and down trading in Asia and Europe but within a narrow $10 band.
It saw gains initially in Asia to $1,752/oz before a retracement to $1,744/oz. It then rose to $1,750/oz again as Asian trading closed.
Early European trading saw gold quickly fall from over $1,750/oz to below $1,746/oz prior to a quick reversal and gold reaching an eight week high at $1,753.45/oz.
Resistance is at $1,750/oz and there appears to be a determined seller at these levels.
However, the short term technicals are positive with a series of higher lows and higher highs.
Gold has risen to 8 week highs despite positive manufacturing data, higher factory activity in Germany, China and the US and the hope that a Greek debt restructuring solution is imminent.
Demand for physical in Europe, Asia and internationally remains robust which is supporting gold.
Investors will today watch the US weekly jobless claims data for the week ending January 28th.
Adding to the very gold supportive interest rate backdrop, Japan's finance and economic ministers are putting pressure on the Bank of Japan to consider easing monetary policy even further.
Negative yields on some bonds (such as TIPS) are very gold positive as is moves to let investors buy short term bills with negative yields.
Gold is also being supported by central bank buying. Russia's gold and foreign exchange reserves rose to $504 billion in the week to Jan. 27 from $499.7 billion a week earlier.
Knowledgeable industry participants continue to be bullish on gold.
Newcrest Mining, the world's third largest gold producer, expects gold to trade as high as $2,500 an ounce and retain its safe harbour status for as long as the world's financial system remains in crisis.
Newcrest chief executive Greg Robinson said today that gold will remain a hedge against a global financial breakdown, citing risks such as a devaluation of the U.S. dollar, today’s global currency, European economies in dire shape and persistent political tensions throughout the globe.
Bank of America Merrill Lynch said today that gold bullion may reach $2,000/oz in Q4, up from a 1Qtr estimate of $1,850.
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Silver is trading at $33.72/oz, €25.66/oz and £21.30/oz.
PLATINUM GROUP METALS
Platinum is trading at $1,618.00/oz, palladium at $689/oz and rhodium at $1,400/oz.
(Bloomberg) -- China’s demand for gold will continue to rise on growing incomes and investment against inflation, Albert Cheng, World Gold Council’s managing director for the Far East region, says in email. Given the country’s “strong affinity to gold” and record imports in November, this year is “set to be a strong year” in a part of a longer-term trend, Cheng says
(Bloomberg) -- Turkey’s gold imports were 2.96 metric tons in January, the Istanbul Gold Exchange said on its website today. Silver imports were 4.2 tons last month, the data show. Holdings rose from 4.4 million ounces in October and 3.7 million ounces in September, according to the data. In September and November, Turkey’s central bank increased the proportion of required reserves that commercial banks can deposit in gold. The changes have increased the amount of gold Turkey declares in its official reserves.
(Bloomberg) -- Iran has $120 billion in foreign currency reserves and 907 tons of gold, the Tehran Times reported, citing Yahya Ale-Eshagh, who heads the Tehran Chamber of Commerce, Industries and Mines.
The gold reserves have a total value of $17.5 billion, the newspaper cited Ale-Eshagh as saying. Iran has “no shortage” of foreign currencies or gold to meet domestic demand, he said.
Ale-Eshagh said recent fluctuations in the gold and currency markets were a result of mismanagement by some state bodies; he called for tighter monetary control by the government, according to the report.
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