Oct 2019


Oct 2019

Weekly markets round-up for StoneX Bullion

By StoneX Bullion

Welcome to a very brief overview of the recent performance in the markets. The essentials are captured in the table below and each week we will show a chart of interest.

Gold prices did break above resistance towards the end of last week, rising to $1,517 on an intra-day basis on Friday and crossing all three key moving averages to the upside. There has been some mild retreat since, but the $1,480-$1,500 band should provide some support for the price now. In the background the physical markets as a whole have remained quiet as consumers are taking al long time to get used to the new range and are nervous of the economic outlook; these two forces in combination are constraining the physical, but the technical changes on the chart have propelled the price higher.

One important area where there have been interesting developments is on the south Asian sub-Continent. We are in the middle of the Diwali (Festival of Lights) Festival and Diwali itself (yesterday) is the most auspicious day in the Hindu calendar for buying, giving and receiving gifts, especially gold and is usually exceptionally busy. This year the story is different.

Our Dubai office tells us that there has been good local demand for diamond jewellery sales across the UAE and other Middle East countries, while gold demand is roughly the same as last year. In India, however, which is the real fulcrum of Diwali demand they are hearing that sales are down by somewhere between 25% and 35% against last year, which given the market’s behaviour over the past four months is no surprise at all. The price hike at the end of last week did not help matters and this has also fed through to the Middle Eastern markets where some selling is coming in again.

So, all in all the gold market remains very cautious at the physical level, and the move at the end of last week was largely technical. Gold ETF activity last week saw both buying and selling for a net gain of just 0.2t to stand at 2,554t. The gain so far this year is 344 tonnes, just 50t less than world industrial (electronics, etc) annual demand.

Thought for the week

If gold ETFs were a central bank they would be the fourth largest in the world behind the IMF and in front of Italy.

Chart — Spot gold and the key moving averages

Source: Refinitiv