Gold Lower on Basel III and Chinese Data Despite Chinese Diversification Talk

Gold

Gold and the dollar have fallen as risk appetite has returned due to the Basel III regulations and the positive economic data out of China. The euro in particular has rallied sharply in what would appear to be a relief rally after the recent weakness. Gold and silver fell marginally last week which has clouded the technical picture and could lead to momentum driven weakness this week. However, the medium and long term fundamentals remain sound and should reassert themselves if there is a period of correction and consolidation.

Gold is currently trading at $1,244.10/oz, €971.95/oz, £806.50/oz.

Gold in USD – 5 Day (Tick). Click on image to view full size

Dollar weakness may have been exacerbated by further talk of Chinese diversification of their massive currency reserves. The Chinese are "on their way to diversify their assets," Zhu Min, a former deputy governor of the People’s Bank of China and now special adviser to the managing director of the International Monetary Fund, said in a Bloomberg Television interview. China has been buying Asian government debt and bought more Japanese bonds than it sold for a seventh straight month in July, heading for a record annual increase, Japan’s government said last week. Chinese officials have sent mixed messages regarding diversification into gold but are likely to be gradually allocating foreign reserves to gold as they have been in recent years. The Chinese government’s gold reserves have risen sharply in recent years from very low levels. Thus, there is scope for further increases, as they account for just 1.7% of foreign exchange reserves.

Silver

Silver fell 3 cents or 0.2% last week and could be subject the technical and momentum driven selling this week. Silver is slightly higher this morning and continues to trade positively. Like gold the fundamentals remain very sound and any sell off is likely to be greeted by buyers buying on the dip.

The gold to silver ratio is trending lower and given industrial demand for silver today and in recent years, has made the silver supply and demand equation even more favourable than non-industrial and non-consumed gold. We will likely continue to see the gold to silver ratio fall with 50 being a likely price target in the coming months.

Gold to Silver Ratio – 10 Years (Weekly). Click on image to view full size

Silver is currently trading at $19.88/oz, €15.53/oz and £12.89/oz.

Platinum Group Metals

Platinum is trading at $1,544.00/oz, palladium is at $521/oz and rhodium is at $2,050/oz.

Mark OByrne

Also on news-goldcore-com

Videos

Gold and Silver Chart Analysis January 2023 with Patrick Karim

Gold, Rate Hikes and The Central Bank Illusion?

Top 5 Gold Buyers’ Motives Revealed

Blog posts

US Federal Reserve Sticks To The Script But For How Long?

Those watching the gold price and price of silver will have noticed the sharp uptick following the Federal Reserve’s announcement, yesterday. This was despite the Fed doing exactly what everyone expected them to do. For now, the Federal Reserve is sticking to its relatively well-telegraphed plan but how long will it be until they need […]

READ MORE

China and the US at sovereign debt war

US dollar hegemony has long been a standard feature of the global financial and economic system. But developments in recent years and months (weeks, even) suggests there are more than a handful of countries who are looking to rely less on the US dollar. Instead countries who have long been at the mercy of the […]

READ MORE

What happens if the debt ceiling raises

It’s that time again when the US government has to prepare itself for an internal battle to raise the debt ceiling so it can meet various obligations. This is a merry dance that has been danced before, as we mention below. For sure, every time it happens fewer and fewer people are convinced of the […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE
Newsletter
Category
Archives
Popular

No posts available

Videos

Gold and Silver Chart Analysis January 2023 with Patrick Karim

Gold, Rate Hikes and The Central Bank Illusion?

Top 5 Gold Buyers’ Motives Revealed

Blog posts

US Federal Reserve Sticks To The Script But For How Long?

Those watching the gold price and price of silver will have noticed the sharp uptick following the Federal Reserve’s announcement, yesterday. This was despite the Fed doing exactly what everyone expected them to do. For now, the Federal Reserve is sticking to its relatively well-telegraphed plan but how long will it be until they need […]

READ MORE

China and the US at sovereign debt war

US dollar hegemony has long been a standard feature of the global financial and economic system. But developments in recent years and months (weeks, even) suggests there are more than a handful of countries who are looking to rely less on the US dollar. Instead countries who have long been at the mercy of the […]

READ MORE

What happens if the debt ceiling raises

It’s that time again when the US government has to prepare itself for an internal battle to raise the debt ceiling so it can meet various obligations. This is a merry dance that has been danced before, as we mention below. For sure, every time it happens fewer and fewer people are convinced of the […]

READ MORE

Featured

The King and Queen will be Gold and Silver

READ MORE