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Gold Falls But Remains Near Highs on Safe Haven Demand

Gold prices are moderately higher and trading back above $1,100.00 in early U.S. trading Monday. More safe-haven buying interest is seen in the gold market after good gains last week that saw prices hit a two-month high. Gold prices have rallied by about 4% so far in 2016. The near-term technical posture in gold has also improved markedly early this year, to also prompt some chart-related buying. February Comex gold was last up $5.70 at $1,103.60 an ounce. March Comex silver was last up $0.107 at $14.02 an ounce.

There is still anxiety in the world marketplace Monday after the Chinese stock market dropped sharply overnight, by over 5%, and hit a four-year low in Hong Kong. Chinese financial and monetary authorities mostly stood aside and let the market trade after last week halting trading with circuit-breakers at one point. China officials did push up the value of the yuan against the U.S. dollar Monday, but that did little to stem the selling pressure on China equities. Australian and South Korean stocks also fell Monday. Japan’s markets were closed for a holiday.

The turmoil in China is prompting strains in the periphery currency markets early this year, reports said.

Crude oil prices are lower again to start the trading week, which is also a concern for the market place—namely the deflationary implications. Nymex crude is trading around $32.50 a barrel. The other key “outside market” finds the U.S. dollar index trading slightly lower in early U.S. dealings.

Recent weaker Chinese economic data has spooked world markets. China is the world’s second-largest economy and is the world’s largest raw commodity importer.

Over the weekend the U.S. few a B-52 bomber with fighter jet escorts near the North Korean border, in a show of military might following last week’s apparent nuclear bomb test conducted by North Korea.

And there is still market concern about escalating violence in the Middle East as Saudi Arabia and Iran are in a stare-down at present.

via Kitco [1]

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza
Alfonso Esparza

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