Gold has once again shrugged off downside pressure from a stronger dollar and is finding support from an uptick in physical buying, although it remained rangebound either side of $1,200 in morning trading on Wednesday.
Spot gold was last at $1,196.0/1,196.80 per ounce, down $4.70 on Tuesday’s close but confined to a narrow sub-$5 intraday range with a peak of $1,208.
“The gold price is… currently defying both the rising equity markets and the firm US dollar. It is finding support from reviving physical demand in Asia,” Commerzbank said in a note.
“China’s appetite for gold is also increasing again: according to data from the Census and Statistics Department of the Hong Kong government, China imported 111.4 tonnes of gold from Hong Kong in October, the highest quantity since February,” it added.
Chinese physical demand had been underperforming, with premiums on the Shanghai Gold Exchange fluctuating between $0 and $1/$2 over spot.
In India, imports reportedly totalled 102 tonnes in the first half of November compared with 150 tonnes in the whole of October. The Reserve Bank of India is reviewing import restrictions to tackle the country’s ballooning current account deficit, which may be encouraging buying ahead of any tightening of legislation.
Also influencing prices is a failure of key OPEC members yesterday to pledge to make output cuts ahead of a Thursday meeting, which sent oil prices lower and triggered a mild sell-off in bullion.
“The precious metals look firm and are well placed to push higher. Judging by the nervous negative reaction to the OPEC development yesterday, we need to be wary that gold could sell off if oil sells off tomorrow, although the market might now have discounted the likelihood of no cut in OPEC production,” FastMarkets analyst William Adams said.
In currencies, the dollar remains strong at 1.2450 against the euro despite mixed US data on Tuesday; equity markets are also stronger ahead of predicted interest-rate rises in 2015.
The CAC 40 is up 0.07 percent, the DAX 0.63 percent and the Euro STOXX 0.24 percent. Yesterday, the Nasdaq closed up 0.07 percent, while the S&P closed down 0.12 percent and the DOW 0.02 percent.
In data, German import prices at -0.3 percent were as forecast but numbers from the US this afternoon will be eyed for near-term direction. Core durable goods orders, unemployment claims, the core PCE price index, durable goods orders, personal spending and personal income figures are due before new home sales and UoM consumer sentiment and inflation expectations.
In the other metals, platinum at $1,219/1,224 per ounce was up $2 while palladium was $7 higher at $795/800. Silver at $16.57/16.62 was down six cents but at $16.70 earlier was just short of a three-and-a-half-week high.
Bargain hunting in silver suggests improves sentiment in bullion. The gold-to-silver ratio climbed steadily from 62.81 in August to 75.44 on November 14 but was last at 71.96.
(Additional reporting by Lynette Tan, editing by Mark Shaw)
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