Gold fell $2.40 to $1,187.80 yesterday. It remained resilient despite Chinese markets being closed due to strong physical demand and concerns about the global economy, the banking sector and the risks of a new global financial crisis.
“Gold was like a beach ball that had been pushed too low in the water and is now bouncing higher with a vengeance,” Mark O’Byrne, research director at GoldCore, told MarketWatch:
But prices have climbed by more than 12% higher in just 5 weeks so a “correction is quite possible and may take place when gold reaches $1,200 per ounce.”
He says a correction is likely on tap, but the “more important question is whether gold has bottomed and we are in a new bull market.”
“We believe we are and gold’s fundamentals and technicals look better and better,” said O’Byrne.
Global stock markets are facing sharp losses amid more signs that international growth is tapering, led by the world’s second-largest economy, China.
Market participants said this week’s start of the Lunar New Year—a holiday in China and many parts of Asia—was helping drive physical demand for gold.
“While the Chinese Lunar New Year is the high point for Chinese gold demand, it does not drop off significantly afterward as the steady current of growing middle classes continues to attract demand,” said Julian Phillips, a founder and contributor to GoldForecaster.com.
“This is not just a one-off purchase when they become middle class—it signals the start of a continuous purchasing pattern,” he said.
Other metals on Comex traded mostly higher. March Silver, outpaced the gains in gold to gain 55.7 cents, or 3.8%, to $15.34 an ounce.
LBMA Gold Prices
9 Feb: USD 1,188.90, EUR 1,061.90 and GBP 822.31 per ounce
8 Feb: USD 1,173.40, EUR 1,050.16 and GBP 810.44 per ounce
5 Feb: USD 1,158.50, EUR 1,035.58 and GBP 797.40 per ounce
4 Feb: USD 1,146.25, EUR 1,027.29 and GBP 782.16 per ounce
3 Feb: USD 1,130.00, EUR 1,034.04 and GBP 781.25 per ounce
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