The gold price is now sitting comfortably above $1,270/oz, buoyed by the US jobs data and the return of China to the market.
This morning Twitter is all-a-flutter about China’s gold imports topping 1,000 tonnes in 2013. As many people are pointing out, Koos Jansen realised that this happened back in 2011. One wonders why the likes of Reuters and Bloomberg aren’t looking at the Shanghai Gold Exchange figures that Jansen looks at.
It is important to note that this new data does not include (amongst other things) government purchases and buying by financial institutions. Once again, this seems to be a red herring similar to when we were all convinced by Zerohedge that the Chinese government had released their reserve numbers.
Also according to the data, China was also the world’s largest gold producer for the seventh consecutive time. Last year gold output reached 428.16 tonnes.
The data was released by the China Gold Association. Back in October we outlined the China Gold Market and provided an explanation of the CGA’s role, ‘The China Gold Association acts as the industry body, or the trade organisation. With interests in every corner of the gold market it ensures the government’s policies are put into action within the world of the yellow metal. Senior staff of the CGA are vocal supporters of building up China’s gold reserves and critics of the US.’
Turkey Gold Imports Fall 80%
In contrast to the China data, Turkey has reported a drop in gold imports by over 80% in January. The weakening Turkish lira and rising gold prices have been blamed. “Lira depreciation has made gold more expensive. The Fed’s steps have caused world gold prices to rise. These have all negatively effected [sic] the gold demand,” said Mehmet Ali Yildirimturk, the head of Istanbul’s Chamber of Jewellers. Some gold commentators may be surprised to read of such a dramatic fall given the expected ‘safe haven’ demand following the devaluation of the currency.
Investor Sentiment Up On Gold
According to the Lloyds Bank Private Banking Investor Sentiment Index investors are moving away from riskier assets such as equities and emerging markets to safe-haven assets, namely gold. Sentiment in the yellow metal, at the beginning of February, jumped from just 8% to 17% as investors responded to US stock market moves and the decline in emerging market currencies.
Citi See $1,433 Gold
Following gold and silver’s phenomenal performances in the last week, Citi have released a report stating they expect gold to test $1,361 before possibly going onto $1,433. “A rally towards $1,361 is expected and overall a double bottom pattern with a neckline at $1,433 is in the making…From a broad perspective, we would not be surprised to see an inverse correlation between gold and Equities just like we saw throughout the last bull market in the 1970’s”.