Gold prices and related exchange traded funds have been hovering around the 200-day moving average but seasonal demand from Asia could boost the precious metal as the Chinese Lunar New Year approaches.
SPDR Gold Shares (NYSEArca: GLD) has declined 6.7% over the past three months as gold futures trade near $1,670 an ounce. [Gold ETFs: Bullion Prices Up for 12th Straight Year]
“After a poor start to the week on Monday, precious metals managed to make some headway yesterday, with gold eventually pushing past the $1,660 resistance level,” Standard Bank said in a note, reports Tom Jennemann for FastMarkets. “The push higher came despite some dollar strength during US trading hours, as optimism over physical demand lent the yellow metal. With Chinese Lunar New Year celebrations approaching … we should see the usual seasonal increase in physical demand.”
The Chinese New Year celebrations start on Feb. 10.
“We find ourselves just ahead of Chinese New Year, which seasonally is one of the strongest times of the year for gold demand, and seven weeks away from the new deadline in the U.S. political system, and we’re surprised at how low gold prices are,” Natixis analyst Nic Brown said in a note, International Business Times reports. “If there was a reason for buying gold, you’ve got two good ones there.”
Physical gold traded on the Shanghai Gold Exchange hit a record high this week, with 19,500 kilograms of gold changing hands Monday, reports Matt Day for the Wall Street Journal.
Commerzbank believes that Chinese buyers “have evidently been taking advantage of the lower prices recently to purchase gold” ahead of the Chinese New Year holiday.