Gold climbed in early-morning London trading, with fresh impetus provided by the return of the Chinese market after the Lunar New Year holiday.
The spot gold price was last at $1,208.20/1,209.00 per ounce, up $4.60 on Monday’s close but down from a session high of $1,212.00 during peak Asian hours. Silver followed the metal higher to $16.50/16.55, up 13 cents.
“Overnight, the Chinese returned from their New Year celebrations and what a difference it made,” Marex Spectron’s David Govett said.
The Chinese market was widely considered to be the primary catalyst behind gold’s gain of almost near 10 percent in January, with Chinese wholesalers buying up large volumes ahead of the holiday.
Withdrawals from the Shanghai Gold Exchange – a useful barometer for demand – surged to 255 tonnes in January, around 10 tonnes higher than the January 2014 total.
Support from Chinese physical buying is unlikely to be sustained, however. Jewellery consumption traditionally weakens after the New Year and retailers are comfortable holding little stock due to a rapid turnover in inventories, Precious Metals Insight’s Phillip Klapwijk told FastMarkets last week.
Still, safe-haven buying picked up on comments in the previous session from US Federal Reserve chair Janet Yellen, who suggested that interest-rate rises in the US are not as imminent as many may have anticipated.
Yields on the US 10-year treasury fell below two percent, which Commerzbank noted lent support to the gold price, which had initially hit seven-week lows at one stage earlier this week.
“Yellen’s testimony was a classic example of political double-speak, with a long ramble about patience and guidance leaving everyone fairly clueless as to when the rate rise will actually happen,” Govett added.
“Maybe and probably this is exactly what she wanted, in which case fair play to her, but the way the markets get pushed about on the back of these statements is far from helpful to the average investor,” he said.
In data out of China this morning, the flash manufacturing PMI edged into expansion mode, rising to 50.1 from the previous reading of 49.7.
US new home sales data as well as speeches from central bankers from the UK, ECB and the US are due later – these may add some volatility to the market.
The PGMs have also been performing well in light of Yellen’s comments, with investors seeing value in the more industrial precious metals. Platinum was last at $1,164/1,174 per ounce, up $5, while palladium was $13 higher at session peaks of $802/807.
(Editing by Mark Shaw)
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