Dollar Gold Price Rallies Again from 2013 Crash Low as Commodities Defy Weak PMI & US Data

EDGWARE (Scrap Monster): Dollar gold prices rallied again on Thursday from $1184 per ounce – the crash low hit in 2013 – as Western stock markets slipped and government bond prices rose after weaker than expected manufacturing from Japan, China and the Eurozone.

Industrial and energy commodities rose however, with copper trading midway between last month's 2015 peak and January's 6-year low.

Euro gold prices meantime followed Sterling gold down towards 1-month lows as the single currency ticked higher versus the Dollar following news of a surprise rise in US jobless benefits claims last week.

Separate data showed a sharp drop in sales of new US homes last month, plus lower manufacturing activity growth in April on the Markit PMI survey.

"A positive turnaround in US economic data is key," reckons a note from Australia bank ANZ, "supporting a higher US Dollar and lower gold price.

"Adequate physical inventories in China should [also] mean import demand underperforms...Onshore premiums in the two key gold markets of China and India indicate that there is no shortage of gold in the domestic markets."

Trading in Shanghai's main domestic gold contract today rose to the highest level since the start of April as Yuan prices fell.

Dollar gold quotes in London stood lower still however, meaning that the incentive for Chinese wholesalers to import metal doubled to just over $2 per ounce.

Premiums on Shanghai's international gold contract, open to foreign institutions and traders with Yuan held offshore, rose to $2.45 per ounce but volumes eased back.

"Gold [fell] to its lowest level since late March," notes a technical analysis from Canada's Scotia Mocatta, "below the 50 day MA [moving average].

"We await confirmation with a focus on a downside break of the recent range, looking for a test below $1180.

If the $1180-84 zone is breached, says Swiss refining and finance group MKS's trading desk, it "will energise the bears and trip stops" – meaning orders to sell – "which are growing around this level."

Swiss refiners imported growing quantities of metal sold from investor holding in London last month, Bloomberg reports, before shipping smaller kilobar products onto Asian markets and "almost doubling" flows to China from February.

"The big investor outflows from the UK via Switzerland to China and India," says Australian bank Macquarie's analyst Matthew Turner, "is a continuation of the flow of metal from West to East" most clearly marked during the gold price crash of 2013.

"Short-term, it is a sign of weakness, not of strength in the market."

Courtesy: www.bullionvault.com