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  1. #1
    Junior Member

    Gold Extends Gains into Third Session, China Demand Aids !!!

    Gold inched up on Tuesday, stretching its gains into a third straight session as buyers in China continued to snap up deals after bullion's plunge to a three-year low last week.

    Prices were also helped by short covering that kicked in after gold logged its biggest ever three-month loss in the second quarter ended June on indications of an early wind down to the US Federal Reserve's stimulus measures.

    "We can see some stock loading in the market and physical buying in Shanghai," said a trader in Hong Kong.

    "However, fundamentals are still bearish and we will test the upside at USD 1,270."

    Spot gold rose 0.5 percent to USD 1,258.51 an ounce by 0318 GMT, while US gold rose about USD 2 to USD 1,257.9.

    Shanghai futures rose for a second straight day after nine consecutive declines. They were trading at over USD 30 premiums to spot prices.

    Bullion, typically seen as a hedge against inflation, has taken a beating since Fed Chairman Ben Bernanke said last month the economy was recovering strongly enough for the central bank to begin tapering its USD 85 billion monthly bond purchases in the next few months.

    Gold plunged 22 percent in the second quarter and is headed for a 25 percent drop this year, its biggest decline since 1981. It fell to USD 1,180.71 last week, its lowest since August 2010.

    Spot gold is expected to end its current rebound at or below USD 1,273 per ounce, according to Reuters technical analyst Wang Tao.

    Physical demand has not come to the rescue of gold as it did in April when prices fell the most in 30 years.

    Read more: http://tradingtipsexpert.wordpress.c...a-demand-aids/

    Also read: checkmatetrades

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  2. #2
    Active Member rongold's Avatar
    The biggest reason the gold was hit so strongly is that the inflation is really not as big as the expectations of all the gold investors were. The rise to almost 2000$ was a consequence of the expectations that the 2% inflation target in USA and Europe will be passed in 2013, but this will not happen this year, nor next one and probably not in the next three to five years. That is the main cause why gold depreciated so fast. It is not the FED decisions itself but also the macroeconomic outlook which is not very good for reaching the inflation targets. If they are not reached the price of gold will stay low, if they are reached in the next few years we could see again strong buying and again 2000$ per ounce very soon.

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