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BookmarkCommerzbank forecast higher bullion prices even after 500-tonnes of gold ‘vanishes’ in China
Gold hit a three-month high on Tuesday morning, defying most expert views that 2014 would see further falls in the precious metal a day after a report revealed 500-tonnes of bullion is missing somewhere in China.
However, the recent rally still has many analysts questioning whether the recent turnaround is just a “dead cat bounce” or a sustained revision in market sentiment?
The yellow metal is up 6pc since the beginning of the year at around $1,290 (£785) but still a long way off the historic high above $1,900 that was achieved in in 2011. Gold endured its biggest price collapse in 30 years in 2013 as investors shifted assets out of exchange traded funds and into higher yielding equities.
Gold has risen recently but remain well below its all-time high. Graph: Bloomberg
But one broker believes that the outlook for gold is once again about to change positively.
“While the fundamental situation has brightened, the technical picture has also improved, which could spark follow-up buying that in the short term would probably drive the gold price even further up,” wrote Commerzbank analysts on Tuesday.
According to the bank, trading volume on the Shanghai Gold Exchange on Monday totalled 25,725kg, the highest it has been since early May last year, “pointing to robust demand for gold there”.
China’s love of the precious metal seem once again to be the main driver behind the current rebound in prices. China consumed 1,176 tonnes of gold in 2013, 41pc higher than in 2012, according to data released on Monday by the China Gold Association (CGA).
