Gold spiked by about $20 in a matter of minutes as a deep-pocketed New York investor likely placed a sizeable buy order, which briefly pushed the price above $1,200 an ounce.
Gold for February delivery on the Comex division of the New York Mercantile Exchange was last up $16.50 at $1,198.40 per ounce. The yellow-metal rose from about $1,183.00 to $1,202.80 in a couple of short moments after traders in the US sat down at their desks.
“This added some spice to what otherwise could have been a boring day,” a US-based trader said. “My guess is that a fund wanted to add some gold [to their portfolio before year-end] so they placed a big order. Then the momentum traders and computers hopped on board, driving the price up above $1,200.”
“But the air is quite thin in that $1,200 to $1,205 area, so we’ve already seen a pull-back to around $1,198.00,” he added.
Meanwhile, in gold specific data, a rise in physical demand in China before the end of the calendar year has provided upward impetus, with premiums on the Shanghai Gold Exchange climbing to $5-6 over spot prices from lows of $1-2 at the start of December.
While current premiums are dropping slightly, uptake on the cheaper price still remains, suggesting that China’s sensitivity to the gold price is still strong.
For the week ending December 19, gold delivered from SGE vaults reached its highest in nearly a year at 61.6 tonnes, bringing the overall year-to-date figure up to 2,016 tonnes.
In the wider-markets, the euro nervously sits just above a two-and-a-half-year low of 1.2123 against the dollar on news that the Greek parliament rejected the government’s presidential candidate, which sets the table for for a snap election on January.
“We’ve no idea at this point how the election process in Greece shall play out except that the centre-right government under [Greek Prime Minister Antonis] Samaras will be tossed out and almost certainly replaced by a much more leftward leaning government headed by young Alexis Tsipras, who is openly far-left in his politics, both political and economic,” Dennis Gartman, editor of the Gartman Letter, said.
The European Central Bank and German government have already warned that a move towards anti-austerity against the EU and IMF would lead to sanctions.
“So the question now is whether and/or how Greece will leave the euro, and that debate, old though it might be, is back hard upon the table. [But] we suspect that Tsipras will moderate his views once the mantle of government is upon his shoulders, but we also suspect that he will govern from the very far left, nonetheless,” Gartman said.
In European equities, the Germany’s DAX and France’s CAC-40 were down 1.22 percent and 1.16 percent respectively.
The data agenda is light today, with only the Spanish flash CPI, EU M3 money supply and private loans of note. The US S&P/CS composite for October was 4.5 percent – the CB consumer index is scheduled later.
As for the other precious metals, Comex silver for March delivery were up 28.6 cents at $16.065 per ounce. Trade has ranged from $15.750 to $16.10.
Platinum futures for April delivery on the Nymex were up $7.30 at $1,210.00 per ounce, while the most-actively traded palladium contract was at $810.95 per ounce, down $1.05.
