Gold bugs lost momentum at the mid-week trading session in London after rising nearly $40 an ounce on Tuesday on the U.S. Treasury yields retreating from their relentless run.
However recent price action suggests the precious metal is being battered by the resurgence of the greenback. At the time of this publication, gold futures were down by 0.3 $ to trade at $1,711 per ounce.
Recall the yellow metal had seen its futures contract sinking to an 11-month low of $1,673.40 on Monday, dropping for the 9th time in 11 sessions.
In an explanatory note to Nairametrics, Stephen Innes, Chief Global Market Strategist at Axi, gave key macros that seem to keep the yellow metal above $,1700 price level amid high demand from gold’s key market that includes India and China,
“And a lot of physical supply coming to market is getting absorbed by real money allocators below US$ 1700; things might not be as bad as they seem.
“According to Gold Wholesalers in Zurich, India’s demand has been incredibly robust, and bars destined for the region have increased – the 5-percentage point reduction in import duty helps.
“China’s demand has recovered this year. Premiums are hovering around US$10 above London. And from what I currently understand, the authorities are yet to award import duties, but I’m hearing that local stocks are close to being depleted on a post-Lunar New Year buying bonanza.”
Bottom-line: Market sentiments suggest that the yellow metal price may have found a floor thus it could be comfortable in the $1700s range, at least for the near term as physical demand remains stout.