Gold hits 16-week high

Emirates (Feb 23)  Spot gold prices closed this week at $1,325 per ounce – a level last seen only in late October 2013, marking a 16-week high for the precious metal.

In fact, the price of an ounce of gold slumped to $1,196 per ounce on December 30, 2013, which means that investors who entered the gold market on the day would be richer by almost 11 per cent in less than two months.

For their gains, you can credit the bad weather – or so says Ole Hansen, the Head of Commodity Strategy at Saxo Bank. In his weekly commodities report, Hansen maintains that commodities showed strong gains for a third week with positive performances seen across all sectors.

“Growth-dependent commodities such as energy and industrial metals also showed a positive return but were held back by another decline to a seven-month low in Chinese manufacturing confidence,” states the report.

Precious metals, have been performing well in 2014. “Gold and silver spent the week consolidating their recent strong gains. Momentum and technical traders have returned to the buy side and are waiting for the driver to carry the metals higher,” notes Hansen although he cautions that prices could decline if a “driver” isn’t found.

“A failure to find such a driver leaves both metals exposed to some long liquidation should the 200-day moving averages at 1,302 and 21.02 respectively give way. The news during the week has been mixed with the impact from the US Federal Open Market Committee supporting continued tapering offset by weaker economic data,” he states.

“Consumer demand which has been the key driver at the beginning of the year has begun to slow in respond to higher prices. Recent data points towards a softening in demand from China and Japan with the premium paid for taking delivery on the Shanghai Gold Exchange dropping to $2/oz after some days rising above $15/oz during the early parts of January,” he says.

Source: Emirates247