US New Home Sales & Ben Bernanke’s Testimony
Gold is in the midst of stringing together four consecutive up days after recovering from a multi-week sell off. Asian demand has remained robust with the return from the Chinese New Year and the Shanghai Gold Exchange premium vs. London blew out to a whopping $24 / toz at one point this week. The International Monetary Fund (IMF) also released data showing that Russia and Turkey had added 12.7 and 10.3 tons of gold, respectively, in the month of January. Despite strong Asian demand and several central banks adding to positions, ETFs have seen net liquidation and the SPDR Gold ETF has its lowest holdings since August of 2012. It is interesting to note that it is mostly retail, and not institutional, clientele that are divesting from the ETF. With the impressive rally that equities had during the month of January, it is not that surprising to see that investors looked elsewhere for a return on their assets. Gold and silver have traded lower than higher today, catching day traders off guard with exacerbated volatile movements. US New Home Sales came in much better than expected at 437,000 vs. 380,000. This was a 15.6% increase month on month. Gold and silver plummeted off this news only to rally with Ben Bernanke’s testimony as traders covered their shorts. Bernanke didn’t hint at the end of quantitative easing and suggested there is little risk of inflation or asset bubbles. Gold’s next area of resistance is at $1,630 while silver is eyeing $29.65. At time of writing Gold was trading at $1,614USD and Silver was trading at $29.28USD.
