Gold traded close to the lowest level in more than a week ahead of French and Italian industrial data due today Spot gold fell as much as 0.2 % to $1,760.85 and traded at $1,764.35 at 11:26 a.m. in Asia Gold dropped to $1,760.43 yesterday, the lowest level since Sept. 27.

***France’s industrial output probably declined 0.3 % in August from July,. Italian output decreased 0.5 % – poll

Gold for December delivery was little changed at $1,765.90 on the Comex. ***Holdings in ETP products rose to a record 2,582.43 tons yesterday. In China, spot gold fell 0.7 % to 356.80 yuan ($1,764) on the Shanghai Gold Exchange Spot silver lost 0.2 % at $33.845 , platinum fell 0.3 % to $1,683 and palladium dropped 0.5 % to $654.50 .

Gold price per ounce is expected to touch US$1,800 within the next one year and above US$2,500 over the next two years, driven by higher demand, low interest rate and central bank gold-buying, After rallying over 10% in last two months in the wake of monetary easing from global central banks, gold prices have struggled to break the key resistance level of $1,800 an ounce level as sagging economic outlook have left bullion investors in lurch.

Gold, traditionally considered as a safe haven asset and hedge against inflation tends to gain when central banks provide economic stimulating measures. Nevertheless, with global economy struggling to find any momentum even after aggressive measures being adopted by central banks, especially the Federal Reserve, market participants are now tentative, seeking shelter in the U.S. dollar rather than putting money on commodities, including precious metals.

While receding prospects of inflation in the mid to long term have capped gains of gold, China’s central bank governor’s remarks also weighed on bullion investors sentiment. The central bank said that it will keep its monetary policy flexible and pre-emptive in order to arrest the slide in the economy, indicating the severity of the economic deceleration. Speculation is ripe among traders that People’s Bank of China will add more liquidity in the money markets by announcing reverse bond purchasing agreements.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service

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