Stock Markets Hit New Highs, Safe Haven Demand For Gold Lower

Silver climbed back above $23.90 an ounce, while copper also gained and oil prices fell.

A day earlier, gold dipped as low as $1440 an ounce in Tuesday’s U.S. session before regaining some ground overnight.

“We believe there will be more sideways price action between $1441 and $1495 before the metal takes another run down to $1323,” says the latest technical analysis from Scotia Mocatta.

Demand for gold as a safe haven is currently lower amid sharply rising equity markets, adds today’s commodities note from Commerzbank.

U.S .stock markets touched fresh nominal highs yesterday, with both the Dow Jones and the S&P 500 setting new records.

European stock markets also ticked higher this morning, with Germany’s Dax setting a new all-time high, following gains in Asia after China released figures showing its trade balance returned to surplus last month, with year-on-year export and import growth both stronger than expected at 14.7% and 16.8% respectively.

“I have no strong conviction whether the [Chinese trade] data reflects reality,” says Zhang Zhiwei, Hong Kong-based chief China economist at Nomura, noting that China’s State Administration of Foreign Exchange recently announced new rules aimed at preventing capital inflows being disguised as trade payments.

“China’s export growth is probably overstated by around seven percentage points,” adds the currency team at Standard Bank.

Proposals from India’s central bank to restrict imports of bullion by banks “will lead to a supply shortage in the market” according to Samir Sagar, director of Manubhai Jewellers in Mumbai, speaking to the Economic Times.

Indian consumers will have to pay 3% to 4% more for jewelry during the lean season. This may go up to 7% to 8% during Diwali and wedding season.

The Reserve Bank of India proposed last week to restrict banks’ import of bullion on a consignment basis – where the metal is shipped but remains the property of the supplier – to meet only demand from gold jewelry exporters. Gold and silver was India’s second biggest import item last year behind oil, and bullion imports are blamed for exacerbating India’s trade deficit.