IN: Gold spot price rises on Chinese demand and weaker greenback
The spot price for one troy ounce of gold has today climbed above the psychological mark of $1,250, following news that China’s net gold imports from Hong Kong climbed to their second-highest level on record in October.
China bought more than 100 tonnes of gold for the sixth month in a row to meet exceptional demand ahead of the Chinese New Year in late January, when the precious metal is bought for rendering into jewellery and other gift items. October imports reached the highest level since the all-time high in March this year, reaffirming the positive outlook taken by analysts at HSBC on the future for gold jewellery demand.
HSBC analysts write: “As gold prices remain low, we expect jewellery demand, particularly in China, to be strong and eventually help support [gold] prices.” Although higher sales don’t necessarily indicate a corresponding increase in the volume of gold consumed, HSBC believes that higher jewellery orders “at the very least indicate some increase in physical bullion demand”.
Practise Trading Options Risk Free - Demo Account.
Gold has additionally been supported today by a sustained slide of the US Dollar Index, which dropped to a three-week low of 80.5 just before the day’s New York opening. Since that point, gold has erased some of its earlier gains and slipped below $1,250. But the greenback is little changed after economic data from the US came out all over the shop.
US Durable Goods Orders for October m/m decreased by 2.0 percent, whereas analysts had expected a fall of just 1.5 percent, following September’s growth of 3.8 percent. The decline is being attributed to fewer orders for new Boeing aircraft, down from September’s 127 new purchases to just 79 in October. The core reading, which excludes the volatile transportation items, also disappointed forecasts for a gain of 0.5 percent m/m, with an actual drop of 0.1 percent, only marginally better than September’s contraction of 0.2 percent.
In contrast, US Unemployment Insurance Initial Claims for last week checked in at a three-month low of 316,000, comfortably beating the market consensus for an increase of 5,000 from the prior period’s 326,000.
According to Deutsche Bank’s chief US economist Joseph LaVorgna, the drop in US jobless claims is further evidence of a steady improvement in the labour market. On that footing, LaVorgna expects Non-farm Payrolls for November, which may prove to be the decisive data for the prospects of a December QE taper, to post a gain of 185,000 when released on Friday of next week.
