Gold price puts up fight against selloff at key US$1,200 level

August 12, 2018

Shanghai (Aug 12)  Gold is showing resistance near US$1,200 an ounce, suggesting prices are for now finding a floor near a one-year low.

Since last week, the metal’s declines have stalled as it gets closer to the price often touted as a key psychological level, trading no lower than US$1,204.58.

While a stronger US dollar and US economic growth are hurting bullion’s appeal, concerns that Turkey’s financial crisis could spread might be preventing a further selloff.

“We are seeing the metal put up a fight against the stronger dollar, with the contagion risk attracting some demand,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail.

There are other signs investors are losing faith. Holdings in exchange-traded funds are at a six-month low and money managers have never been so bearish.

Gold for immediate delivery on Friday slipped about 0.1 percent to US$1,210.57 an ounce in New York, posting a fifth straight weekly loss, down 0.6 percent.

On Comex in New York, futures for December delivery on Friday settled 0.1 percent lower.

While the trend remains bearish, there is a possibility of a technical rebound to US$1,230 or US$1,235 in the coming weeks, according to Carlo Alberto De Casa, chief analyst at brokerage ActivTrades PLC.

“It’s probably still too early to pop the champagne, as the gold bears are still in control and have yet to be challenged,” Hansen said.

In other precious metals, silver and platinum fell in the spot market while palladium gained.


As drought withers wheat crops across Australia’s east, farmers in the country’s west might be set for a bumper harvest.

The growing season for most of Western Australia has been “near perfect so far” and crops are ahead of where they would normally be with a late-May break to the season, the Grain Industry Association of Western Australia said in a report on Friday.


The state’s total crop production is forecast at 15.5 million tonnes, including 9.9 million tonnes of wheat, the group said.

Risks include exposure to sudden hot weather and frost in the next six weeks, it said.

In eastern Australia, all of New South Wales, the country’s second-biggest wheat grower, is in drought after the state had its driest July since 2002.

After consecutive years of bumper harvests, global wheat output is set to fall to a three-year low as dry spells hurts crops in producers from Russia to Germany to Australia.

The worsening outlook last month spurred a 20 percent surge in eastern Australia wheat, beating all raw materials in the Bloomberg Commodity Index and the 10 percent rally in Chicago futures.

“Any negative change to the largely favorable season currently on the cards” for Western Australia “will reverberate across the Australian market,” Rabobank International said in a report on Friday, estimating the state’s wheat crop at about 9 million tonnes.

Late next month and early October will be critical for domestic markets, as many livestock farmers only have feed coverage for two to three months, it said.

Without spring rain to boost pasture growth, farmers will need to decide whether to continue to feed their stock, it said.

Livestock prices continue to favor feeding of stock and the inclusion of non-grain alternatives, such as almond hulls, oranges and cotton seed, in feed, Rabobank said.

The Eastern Young Cattle Indicator on Thursday fell to the lowest in more than three years as dry conditions limit demand and producers face the prospect of running out of feed and water.


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