Precious metals fell on Friday, notching its first weekly drop in six due to strong U.S. economic growth, concerns over the U.S. Federal Reserve’s withdrawal of monetary stimulus and a slump in Chinese demand. Chinese markets closed late in the week for the Lunar holiday and will remain shuttered for the balance of the week. Gold recovered a bit in the Asian session to trade at 1244.40. Silver gained 10 points to trade at 19.13 well below its average trading range and its range in 2014. Platinum gained $6.45 to trade at 13847.35 below its trading range. Stress over the turmoil in the emerging nations has sent traders to the safety of gold and the yen support both assets. The International Monetary Fund said some developing countries need to take action to “improve fundamentals” as emerging-market stocks extended their worst start to a year since 2008. Gold returned to the lower end of its current range with the near-term outlook very much depending on the direction of the US stock market and the dollar. Slowing Chinese demand sent the metal looking for support once again. The failure to gain a proper stronghold above resistance at 1,272 triggered another bailing out of long positions gold may find enough support from this weakness to stay above important support at $1,231/ounce.
Despite the current rangebound nature, gold nevertheless had a good January which yielded a positive return for the first time since August and in the process, the yellow metal outperformed bonds, stocks and the dollar. Compared with the beginning of the year, the investor attitude towards gold has been on the mend, but so far institutional investors continue to stay clear while hedge funds are only engaging on a relatively small scale. Continued stock market weakness and a prolonged emerging-market crisis may alter the outlook for global growth and eventually persuade investors back into gold, but until such time, a bearish approach by many investors will continue to limit the upside.
Copper slumped by around 2 percent last week on the back of unfavorable data from the two biggest consumers, the US and China. Also, mixed economic data from Eurozone along with weak global market sentiments exerted downside pressure on prices. Low inflation remains in Europe which might prompt the ECB to take some action this week. Further, announcement of QE taper of $10 billion by the Federal Reserve in its meeting last week led to strength in the DX and thereby acted as negative factor for prices of the metal. The decline in inventories by around 4 percent could not prevent downside movement. Copper is trading at 3.198 well below its trading range. With the Chinese markets closed for the week there might be little action here. Palladium recovered $1.30 to trade at 704.90. During the Asian session this morning trading Base metals at the LME platform are trading marginally lower tracking the negative Asian equities.