Gold trading at a 3 month high

Gold is currently trading at a $1185 an ounce, a 3 month high. On Wednesday, U.S retail sales figures were flat and producer prices recorded their largest decline in 8 months. With weak recent U.S. data which has been prevalent over the last couple of weeks starting with the poor employment report, an interest rate rise is unlikely in 2015 and gold has benefited from the recent poor U.S. economic data. Gold, as a non-yielding asset tends to benefit from very low interest rates.
Bullion has also benefited from the weakness in the U.S. dollar over the last few weeks. The U.S. dollar has hovered around seven-week lows against a basket of currencies paring some of its gains for 2015.
The price of the yellow metal has also been boosted by weak economic data from China. Physical demand for gold has been rising in China in recent weeks. One of the largest gold retailers in China, Chow Tai Fook said that its sales of gold products in the country rose 22% in the three months to end of September. The recovery in jewellery demand in China and constrained global gold supplies have given a boost to gold’s price outlook.
The surge in Chinese demand is likely to be supported by strong Indian demand over the next month because of a series of Hindu festivals, when it is considered auspicious to buy gold. India and China together account for approximately 50% of global physical demand for gold.
Gold has recovered approximately $100 an ounce since the end of July when it was trading at around $1085 an ounce. With the global outlook for the world economy weak and interest rate rises being delayed, the price of gold should continue its recent recovery.
gold October 15 2015 3 month high XAUUSD
Get the 5 most predictable currency pairs

About Author

Ronnie has over 15 years’ experience working with financial products and started his financial career at CMC Markets in 1999 and in 2001 he joined Merrill Lynch Investment Managers (now BlackRock - the world's largest asset manager) and worked there for over four years as a RFP analyst. Since 2005, he has worked in a number of brokerage firms as a CFD and FX sales trader and market strategist. A seasoned commentator, Ronnie has appeared many times on global business channels (BBC, Bloomberg, CNBC, CNN and SKY) to discuss topics concerning the financial markets. He has written numerous business-related articles and regularly lectures.

Comments are closed.