Bullion Steadies from China Drop, 'Sentiment Changing' Even as Silver ETF Shrinks Again

[The Machine]

 

 

BULLION PRICES rallied from an overnight drop Thursday in London, recovering after China's key markets returned from a week-long holiday to find gold and silver trading 2% and 6% higher respectively in Yuan terms.

 

Prices fell from the start of trade in Shanghai, dropping 0.8% for gold bullion and almost 4% for silver by mid-morning in Dollar terms in London dealing.

 

Gold prices then steadied above $1137 per ounce, some 1.4% below Wednesday's new 2-week high.

 

"Despite consistent selling on this latest rally," says the trading desk at Swiss refining and finance group MKS, "it feels like there is a bit of a change of sentiment amongst traders.

 

"Investors are not as pessimistic towards the precious."

 

Dealers at Japanese trading house Mitsui Global Precious Metals meantime say that, using Ichimoku technical analysis, gold prices earlier this week "broke up above the Daily Cloud top...which now lies at $1140.

 

"The short term trend is strongly positive. [but] gold is hitting resistance from a simple trend line that extends back to the January 2015 high. This is the fourth touch, so a close above $1147 this week would look positive."

 

Silver meantime recovered Thursday's earlier drop to $15.41 to reach $15.66 per ounce – a level which bullion-bank Scotia Mocatta's technical analysts saw as likely "support" in their Wednesday night comment, because it marked August's high.

 

The Gold/Silver Ratio – which simply divides the gold price by the silver price, to judge their relative strength – had fallen for 7 consecutive sessions, Scotia's technical note added.

 

Thursday saw the Gold/Silver Ratio recover as gold held firmer than silver, rising from yesterday's US finish below 71.5 to reach 73 ounces of silver bullion per 1 ounce of gold.

 

ETF investors meantime again cut their position in silver products Wednesday, extending the drop in the quantity of bullion needed to back the shares to well over 200 tonnes from this time a month ago in the giant iShares Silver Trust(NYSEArca:SLV), taking it to new 3-year lows at 9,802 tonnes.

 

The leading gold ETF – the SPDR Gold Trust (NYSEArca:GLD) – dropped almost 2 tonnes Wednesday, retreating to a 1-week low at 687 tonnes.

 

Looking meantime at key consumer gold markets, proposed tax changes in the United Arab Emirates "could hit" what specialist analysts Metals Focus call "improving" demand across the Middle East region, led by Saudi Arabia and – "albeit from a low base" – Iran.