The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
As my colleague David Madden pointed out yesterday, there was renewed optimism for the precious metal as gold bugs were hopeful that the new Indian government would have a slightly more relaxed attitude towards taxing imports.
This optimism has quickly evaporated following the World Gold Council’s revelations about China, the world’s biggest consumer of the metal. Chinese demand has dropped in the first quarter of 2014 by 18%. This is being attributed to lower demand for gold as a store of wealth and as a defensive hedge to global troubles.
Over the course of the day gold has traded as low as $1286, just below the 200-day moving average. Every time it has drifted down to the $1280 level the buyers have returned.
Although we have seen volatility in gold it continues to bounce along the support, and only a close below $1278 would cause me to change my stance.