Gold Climbs on China Demand

Gold swung between gains and declines in New York as the dollar strengthened and amid signs of increased demand in China before the country’s Lunar New Year that starts next month.

Data showed this week that China’s net imports of gold rose to a seven-month high in November, while volumes traded on the Shanghai Gold Exchange jumped. Gold slid to a four-month low on Jan. 4 after minutes from the Federal Reserve indicated that policy makers may end $85 billion in monthly bond purchases some time this year. The U.S. Dollar Index, a gauge against six currencies, advanced for a second day.

“It looks like the dollar strength” that’s holding gold back, Marc Ground, a commodity strategist at Standard Bank Plc in Johannesburg, said today by phone. “Seasonally, we expect gold buying to ramp up ahead of the Chinese New Year. That should draw a line under where it could fall to.”

Gold for February delivery fell 0.1 percent to $1,660 an ounce by 7:49 a.m. on the Comex in New York. Prices rose as much as 0.2 percent earlier today, climbing above the 200-day moving average, and lost as much as 0.3 percent. Bullion for immediate delivery added 0.1 percent to $1,660.38 in London.

Volumes for bullion of 99.99 percent purity on the Shanghai Gold Exchange were 9,294 kilograms (9.3 metric tons) yesterday, about double the daily average in 2012, according to the bourse’s website and data tracked by Bloomberg. That followed a record 19,504.8 kilograms on Jan. 7.

Bloomberg

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Dean Popplewell

Dean Popplewell

Director of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2007, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell