Gold price rises on physical demand from China
iNVEZZ.com, Monday, January 05: The price of gold has risen so far in today’s trading, pulling away from a one-month low touched during the previous session. The precious metal has shrugged off US dollar strength on the back of support from strong physical demand from China.
Gold for immediate delivery had risen 0.51 percent, or $6.07, to $1,194.07 an ounce as of 09:07 GMT, and was trading 0.23 percent above its 50-day simple moving average of $1,191.26. It touched $1,166.86 on Friday, the lowest since 1 December. The precious metal posted its first consecutive annual decline last year since 2000 as the Federal Reserve ended its quantitative easing programme in October and moved closer to raising interest rates.
According to FastMarkets analyst William Adams: “Given the strength of the dollar … it [is] somewhat surprising the precious metals are as strong as they are, but generally the precious metals seem content to be range trading above the November lows. We expect good underlying buying to continue to provide support.”
The DXY dollar index, which pegs the greenback against six of its major peers, rose to a nine-year high of 91.58 in earlier trading as the euro tumbled to its lowest level since 2006. The gauge stood at 91.38 as 08:59 GMT, up 0.34 percent intraday. A stronger dollar tends to have a negative influence on the price of gold, as it makes dollar-denominated precious metals more expensive when converted to other currencies.
On the COMEX in New York, gold for February delivery had risen $6.1 to $1,193.9 as of 09:11 GMT. The Bullion Desk cited a note from MKS Capital as saying:
“The Chinese were firmly on the bid at the open the premium sitting around $4-5 over spot and forcing the gold price above $1190 […] Seasonally China has good demand between now and their lunar new year which is in Feb, so we expect premiums to remain robust”.