Putin says Russia and China must secure gold reserves

Today’s AM fix was USD 1,265.25, EUR 928.83 and GBP 754.52 per ounce.

  • Yesterday’s AM fix was USD 1,283.00, EUR 940.48 and GBP 762.87 per ounce.
  • Gold fell 2% yesterday to $1,264.76/oz. Silver fell 1.8% to $19.06 per ounce.


Chart courtesy of Reuters  

Gold (COMEX:GCM14) broke below support at $1,284/oz yesterday and quickly fell to nearly $1,265/oz. Overnight, gold in Singapore fell to nearly $1,260/oz prior to a slight bounce back to $1,266/oz.

Better than expected U.S. economic data and slightly lower official Chinese demand were cited as reasons for the move lower, but it appeared more computer- and technical-driven as the price falls came before the U.S. economic data and Chinese demand figures were released.

Technically, gold is vulnerable to a further fall to the double bottom between $1,180/oz and $1,200 per ounce.

The 14-day relative-strength index fell to 32.9 yesterday, the lowest since December and near the level of 30 that suggests a potential rebound to technical analysts. Gold has rebounded 5.2% this year, even after yesterday’s 2% price fall. It remains one of the best performing assets so far in 2014.  

Geopolitical impact

The price weakness came despite continuing bullish developments for the gold market. Yesterday, there was news of China launching a new physical Global Gold Exchange, and Russian president Vladimir Putin again affirmed how Russia values its gold reserves.

Russia and China need to ensure their gold and currency reserves are secure, Putin said at the St. Petersburg International Economic Forum.

"For (Russia and China), it is important to deposit those (gold and currency reserves) in a rational and secure way," he said. "And we together need to think of how to do that, keeping in mind the uneasy situation in the global economy."

China and Russia will consider further steps in order to use national currencies in bilateral transactions, Putin said.

About the Author
Mark O'Byrne

Mark O'Byrne is executive director of Ireland-based GoldCore.

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