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Gold Prices Start The Week Soft As Chinese Celebrate Year Of The Horse

By Kitco News
Sunday February 2, 2014 7: PM

(Kitco News) - Gold prices could struggle during a relatively quiet Asian session as Chinese markets are closed in recognition of the new year, said analysts.

In electronic trading, Comex April gold futures opened Sunday evening at $1,242 an ounce, a gap lower from Friday’s electronic closing price of $1,245.60 per ounce. Prices have managed to rally from the weak open and as of 6:47 p.m. EST, April gold is at $1243.40 an ounce.

Analysts at ANZ Bank in Australia said that although Chinese markets are closed for the next week, they are expecting physical demand to remain low for at least two weeks and as a result are forecasting lower prices.

“With the Chinese absent, the market is likely to struggle to hold rallies,” they said in a research note.

Gold analysts will continue to watch global equity markets and use it as a barometer for gold demand. Global equities, especially emerging markets, ended the first month of the year in negative territory. The S&P 500 index ended January down almost 3%. In other major markets, Japan’s Nikkei dropped 8.5% and Hong Kong’s Hang Seng dropped 5.5% in the first month of the year.

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Edward Meir, commodities consultant at INTL FCStone, said the gold market should be fairly resilient as equity markets remain embroiled in turmoil in February.

However, the yellow metal could also contend with a strong U.S. dollar. Currency analysts at Brown Brothers Harriman said they are expecting the U.S. dollar to extend its gains against most of the major currencies.

From a technical perspective, the analysts said the U.S. dollar index is trending towards its three-month high at 81.50.

“A break of this cap could see the advance extend toward 82.00, with the 82.50 area being a more formidable barrier,” they said.

By Neils Christensen of Kitco News; nchristensen@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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