Gold Price: Chinese Lunar New Year Stokes Buying Frenzy
Gold notched fresh ten-month highs Wednesday and was on track for its third consecutive session in the green as physical demand from China provided another catalyst for the buying frenzy.
Bullion Approaches $1,350
Gold for April delivery reached a high of $1,349.80 a troy ounce on the Comex division of the New York Mercantile Exchange. That was the highest since last April. At the time of writing, the yellow metal was trading at $1,346.10 a troy ounce, where it gained $1.30, or 0.1%.
Bullion’s rally moderated at the start of February but has since come back stronger. Prices are up 3% since Feb. 11.
March silver futures rose 6 cents, or 0.5%, to $16.03 a troy ounce. The platinum spot price surged $8.84, or 1.1%, to $828.49 a pound.
Precious metals are seeing higher demand not just from traders, but consumers as well. The latest buying frenzy came on the heels of Chinese’s recent Lunar New Year celebrations, which culminated in the first week of February. The week-long celebration is known to trigger high demand for jewelry.
That was the key takeaway from the latest weekly report from Metals Focus. Analysts at the British research firm issued the following statement regarding China and the gold rally (as quoted by Kitco):
“Some manufacturers we talked to said they have received healthy stock replenishment orders, since business reopened on 11th February, while others expect retailers to return after the Lantern Festival (19th February). This lends more confidence to our forecast that the Chinese jewelry market will enjoy further modest y/y growth in 2019.”
Large orders ahead of the holiday allowed the firm to reiterate its forecast for a 3% rise in Chinese jewelry demand this year. That follows a similar increase in 2018.
China is at the center of an ongoing trade dispute with the United States that has threatened to not only undermine global economic growth, but the price of gold as well. China remains heavily dependent on exports to sustain its economy and any disruption in trade flows could hasten an economic cooldown that began more than five years ago.
Beijing has sent an envoy to Washington to continue negotiating a new trade agreement. Both sides have until March 1 to reach a new agreement before tariffs on Chinese imports are reapplied. However, President Trump has expressed willingness to let the deadline “slide” if both sides made enough progress in their talks.
Featured image courtesy of Shutterstock. Chart via Barchart.com.