Gold price extends gains for third session
London (Jan 6) Gold hit a four-week high on Wednesday, extending gains for a third session, as persistent concerns over the Chinese economy battered stock markets, while tensions simmered in the Korean peninsula and the Middle East.
The metal is closing in on key chart levels, including the December high at $1,088.70. A push above $1,088 would indicate that gold may have bottomed out for now after twice rebounding from the $1,045 area in December, technical analysts said.
Spot gold was up 0.6% at $1,083.76 an ounce at 12.47pm, while US gold futures for February delivery were up $5.10 an ounce at $1,083.50. Earlier it reached its highest since December 7 at $1,085.60.
"Some risk aversion prompting safe haven flows has helped gold to stabilise and now test resistance," Societe Generale analyst Robin Bhar said. "Physical demand has been pretty strong at the lower levels. As we go higher, we could see some of that physical demand beginning to slow. Now we need investors to jump back in and look to hedge some of the uncertainties over global growth, over China, with positioning in gold."
World stocks fell for a fifth day on Wednesday as China fuelled fears about its economy by allowing the yuan to weaken further, and a nuclear test by North Korea added to a growing list of political worries.
North Korea said it successfully tested a miniaturised hydrogen nuclear device on Wednesday, setting off alarm bells in Japan and South Korea.
Relations between Saudi Arabia and Iran collapsed over the weekend after the kingdom’s execution of a Shi’ite cleric, a prominent critic of Saudi policy, set off a storm of protests in Tehran.
"The metals are likely to continue to take direction from moves in equities, developments in China, US dollar swings and to a lesser extent geopolitical factors in the short term," MKS said in a note on Wednesday.
Traders will examine the minutes of the US Federal Reserve’s last meeting when they are released later on Wednesday for clues about the US central bank’s plans for interest rate hikes.
Gold fell 10% last year on fears higher US rates would lift the opportunity cost of holding non-yielding bullion.
The Fed raised rates for the first time in nearly a decade last month and is expected to hike rates further this year.
Silver was up 0.3% at $13.98 an ounce, while platinum was down 0.3% at $883.75 an ounce and palladium was down 1.4% at $529.40 an ounce.
Source: bdLive.za
