Last Friday gold ended at $1730.67 per ounce, $6 down for the day. By now, the yellow metal added $3.19 per ounce to $1,734.10 in an electronic trading, holding almost a 3-week high.
This week, gold traders would watch closely the events in the US and Europe.
During the last Friday session, the price of the yellow metal faced a drop. However, bullish sentiment prevails in spite of the risk aversion on the market.
US dollar interest rates would very much likely stay low in the coming months, due to the re-election of Obama, which means that the monetary policy of the country would remain more or less unchanged. And this is the main reason for the yellow metal to gain.
Gold is expected to become more expensive for international buyers and it will continue to advance even if positive data from the Euro zone is released.
On Monday, an official from the central bank in China – BSE reported that the bank has interest in more opened international market. Yet, banks did not announce schedule for precious metal import licenses.
Recently an industry conference had taken place in Hong Kong. The general director of the financial market department of the People’s Bank of China spoke on the gold policy. He said that the bank is up to quickly open up to the international gold market. The official didn’t provide any further detail on the plan, but assured the participants in the serious intention.
Elsewhere in India, the weaker rupee and the heavier import taxes combined with purchase interest will play a major role in investors actions. Analysts expect this year China to overtake India as the bigger consumer of yellow metal. Although, in the coming week due to the Diwali celebrations, gold and silver purchases in India are very much likely to spike.
China has rigorously adjusted the import and export of gold by giving licenses only to few banks such as Bank of China, China Construction Bank, Agricultural Bank of China and Industrial and Commercial Bank of China. Although there is no current information on the precious metal purchase activity, it seems the central bank’s policy is to support the hold of physical gold as hedge against the weakening dollar.
