Gold Vulnerable To Manipulative Sell Off In June – Bargain Hunters Delight

Friday, May 30, 2014
By Paul Martin

By Mark O’Byrne
Friday, 30 May 2014

Gold bullion in Singapore traded sideways around the $1,258/oz level prior to a bout of concentrated selling at the open in London (0800 BST) saw gold quickly fall from $1,257/oz to $1,253/oz.

The move lower this week would appear to be technically driven as there was no negative headline data, obvious reasons for price falls or indeed evidence of physical gold selling. Indeed, the mood music for gold is quite positive – especially the worsening situation in Ukraine and attendant geopolitical risk.

One plausible factor for gold’s weakness is the ever increasing, “irrationally exuberant” appetite for risk globally which may be impacting gold. Yesterday, the poor U.S. GDP number, which was much worse than analysts had forecast, did not lead to the bounce in gold that one would have expected. Nor did it lead to weakness in permanently levitating stock markets which continued on their merry way higher.

The simplistic view that the U.S. economy’s poor performance in the first quarter is purely weather related remains prevalent. This is despite increasing evidence that the U.S. consumer is struggling and close to being tapped out. The latter scenario is likely the case which will prove bullish for gold in the long term.

Gold premiums in India almost halved this week on the belief the new government will ease restrictions on imports of the precious metal thereby increasing demand. Indian premiums fell to $30-$40 an ounce over the global benchmark, from $80-$90 last week, dealers told Reuters.

In China, gold premiums ticked slightly higher this week but remain at around $3 per ounce. Chinese premiums have remained depressed this week, which suggests demand in China has not yet picked up on this week’s price weakness.

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