LAWRIE WILLIAMS: Gold within striking distance of $1,300 as Asian demand picks up
We reported here yesterday on a number of factors which have been driving the gold price upwards through raised levels of uncertainty boosting safe haven demand for the metal. It received a further boost with President Trump’s reiteration of a position he has held all along – that the dollar is overvalued in relation to other global currencies, but almost unnoticed is the fact that Asian gold demand may well be picking up strongly as well.
We reported here earlier this month that Indian gold imports picked up strongly in February with the release of official figures for that month showing India imported 89 tonnes of gold that month. (See: Indian gold imports picking up?) and now we have an unofficial figure for March imports of 120.8 tonnes – a huge level and if verified will have been the highest monthly total since mid-2015 and. According to Bloomberg 582% up on the same month a year earlier. (See: India Gold Imports Said to Jump 582% on Festival, Wedding Demand. One should stress however that these are unofficial figures and fly in the face of a GFMS suggestion that India’s March imports were likely to be weak with demand falling in the face of higher gold prices.
Coupled with this reported rise in Indian imports, Shanghai Gold exchange withdrawal figures are also rising on those recorded a year earlier. The latest available official figure for March withdrawals from the Shanghai Gold Exchange website is for 192.25 tonnes, although whether this is the full month’s figure remains to be confirmed. The final figure could yet be a little higher. But if we assume this is the full withdrawal level for March it is almost 5% higher than the same month in 2016 and puts the Q1 figure 7.7% up on a year earlier. While this is still substantially down on 2015, which was a record year for gold movements through the exchange, it does suggest that Chinese demand may be picking up on the weak 2016 figure.
Add all these factors together with the safe haven buying and prospects for gold in the short term at least look set fair and would certainly seem to put the psychological barrier of $1,300 gold within reach. With general equities markets falling we could see some further momentum for gold purchases – even though the US dollar index is up a little so far today despite President Trump’s comments.
13 Apr 2017
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