Gold Price Falls But Chinese Not Buying Gold Indicates Prices Are Going To Fall Further

Gold prices are struggling near a 4 year low.  In the last 10 days gold prices have fallen from $1255.31 to $1167 per ounce. Global gold prices are at there lowest since 2010. With US Dollar strengthening it is obvious that gold prices are going to fall. So fall they did. Gold continued to suffer near a four-year low on Tuesday as the safe-haven asset got no reprieve from the strength in the dollar and the U.S. economy, while a lack of robust physical buying and weak technicals underscored expectations of further declines. However this drop in gold prices is not moving the Chinese buyers to start their buying. A look at the Daily Chart of XAUUSD shows gold bouncing down from EMA55 which acted as a strong area of resistance. MACD is very bearish meaning the downtrend will continue for now.

Gold Market Analysis

When gold prices are in a slump, Chinese buyers, eyeing a bargain, traditionally move in and stop the rot. But that doesn’t seem to be happening this time around. The current market decline has seen the price of gold lose more than a third of its value in two years, to around $1,173 an ounce.

Unusually, prices on the Shanghai Gold Exchange, the world’s biggest platform for physical trade, are at a discount of around $1 an ounce to the global benchmark, slipping from premiums of $1-$2 an ounce last week. Since all physical gold trade in China goes through the exchange, it is seen as a reliable barometer of Chinese demand.

The lack of Chinese buyer demand is a strong message that gold prices are going to fall further.

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