Gold’s Irresistible Forces [SPDR Gold Trust (ETF)(NYSEARCA:GLD)]

midastouchgoldWhat happens when an irresistible force meets an immovable object? We’re about to find out in the gold markets. The irresistible force is Chinese gold demand, which is surging along with its price. Gold flirted with $1,300 on Thursday. (Much higher demand from India could be coming shortly, too.)

The immovable object is Wall Street’s bearish view on gold, a view that hardened after gold plunged 28% last year. Wall Street hates gold with the white-hot heat of a thousand suns.

But I think Wall Street is about to get blown away. And not just because gold hit a three-month high on Tuesday.

 

A chart of gold prices shows that the metal has fallen very far – but there are signs to give the bulls hope. We can see a double-bottom is in place. Gold broke its weekly downtrend.

 

I’d say the technical picture is improving even as bullish fundamentals line up for the next push higher.

They include…

Renewed Buying From China

China’s gold consumption jumped 41% last year to 1,176.4 metric tonnes, according to data from the Chinese Gold Association. “Chinese consumer demand is unprecedented,” one dealer said in news reports.

 

Jewelry demand climbed 43% and bullion demand soared 57%.

 

Consumer sales surged by at least 20% in December 2013 from a month earlier and were up 15% compared with the same period in 2012.

China’s 2013 gold imports from Hong Kong more than doubled from the previous year, even though its own mines are producing at record rates.

An End to Selling of Gold by ETFs?

Assets in bullion-backed exchange-traded funds shrank 33% last year. All that metal rushing out of the funds weighed heavily on gold prices.

China bought

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *