This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Gold is trading at $1293, down 0.7% as the soft yuan has impacted the level of gold imports into China, which is a major import of the precious metal. The yuan has lost over 3% versus the US dollar year-to-date and since gold is listed in US dollars it has made the yellow metal relatively more expensive to buy for clients based in China. Some traders were speculating that the People’s Bank of China was behind the decline in the yuan; if the currency pulls back some of its losses, we could see gold head towards the important $1300 level.
Gold is currently below the 200-day moving average of $1294. This is a worrying sign although, as I mentioned previously, if violence were to escalate in Ukraine we could easily break through the $1300 mark. Equity markets have been strong lately as traders have been moving their cash from safer assets like gold to riskier assets like stocks. We could see a reversal of that if uncertainty in Ukraine increases.