Gold for Chinese New Year

In the overnight session, physical buyers in Asia lifted gold off its recent lows after it had trended down for the past four trading days. With the Chinese New Year rapidly approaching, bargain buyers have come in to drag gold back above $1,660. The increased Asian demand can be most notably seen in the Shanghai Gold Exchange vs. Loco London gold premium. While the spread has been averaging a $6 / toz premium in favor of the SGE recently, this has blown out to $10 / toz overnight. Even though the SGE requires purer gold and has greater restrictions than that of the London Bullion Market Association (LBMA) which governs London pool metal, this is still a very juicy premium. Physical buyers in China are obviously scrambling to fulfill orders before their New Year. Platinum sold off yesterday with news of Anglo American Platinum putting scheduled job cuts on hold for another two months. Amplats had “constructive discussions” with labor unions and the Department for Mineral Resources. The perceived progress in discussions seems to have been forgotten today though as platinum has rebounded off its double bottom of $1,660 from yesterday and today. The overall picture for platinum remains decidedly bullish given the historical unrest in South Africa and the near term resistance is intact at the high from this year of $1,700.