The gold price made modest gains on Monday after hitting three-month lows on Friday but the absence of Chinese physical buying hints of further downside pressure.
Spot gold was last at $1,173.50/1,174.30 per ounce, up $5.70 on the pre-weekend close – it hit its lowest since December 1 in that session. Silver followed gold slightly higher, climbing five cents to $15.92/15.97 after hitting a fresh two-month low earlier at $15.73.
Gold sank on Friday after the release of better-than-forecast US jobs data that increased the likelihood the Federal Reserve will raise interest rates from near-zero levels in the near term.
While some market observers had since been looking to China to push gold back towards the key psychological level of $1,200, demand has been unimpressive since markets reopened this morning, raising concerns that prices have further to fall.
“We were expecting some fireworks on today’s open following the huge sell-off in precious last Friday but in never came. Despite some good volumes going through in the first hour of trade across gold, silver and platinum, price action remained relatively orderly,” MKS’ Alex Thorndike said in a note. “Perhaps many of the physical traders think we have further to go to the downside?”
The Shanghai Gold Exchange saw moderate buying on the open, pushing the onshore premium to $5 over spot, although it subsequently returned closer to the pre-weekend level of $3-4, MKS reported.
“Overnight, prices have recovered slightly with some physical demand evident, but as I have said many times before, the physical buyers do not chase markets higher, but rather let it come to them. They will be in no hurry to buy vast quantities and will wait and see if the market slips further,” Marex Spectron’s David Govett said.
UBS lowered its one-month and three-month forecasts on gold to $1,200 from $1,240 and to $1,170 from $1,200 respectively.
A stronger dollar continues to cap any higher movements – it last at 1.0878 against the euro, close to the fresh-11 year highs hit earlier at 1.0833.
In data, the Chinese trade balance released over the weekend at a record $60.6 billion beat the forecast $7.8 billion and the eurozone Sentix investor confidence figure this morning at 18.6 was better than the predicted 15.3. But the German trade surplus at 19.7 billion euros fell short of expectations.
Eurogroup finance ministers are meeting today and the US labour market conditions index is due later.
The PGMs were mixed – platinum at $1,153/1,158 per ounce was $3 lower after hitting a multi-year low earlier this morning at $1,150 while palladium fell $9.50 to $823/828.
(Editing by Mark Shaw)
The post Gold price edges up but lack of Chinese buying raises red flags appeared first on The Bullion Desk.
No comments:
Post a Comment