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Gold range bound as WGC shows Jewellery demand strong

21 May 2014

Another range bound night for the precious metal complex overnight, with gold recovering from a low around USD $1285oz earlier in the day. Climbing back all the way to just below USD $1300oz later in the day, the market is currently at USD $1294oz with neither bulls nor bears able to gain a decisive advantage.

The World Gold Council was out with its latest report overnight, highlighting that, overall, Q1 2014 gold demand was robust, with jewellery sales hitting 571 tonnes, the biggest start to the year since 2005. ETF outflows have also slowed to a crawl, especially compared to the massive outflows seen last year, another sign that investor sentiment may well be closer to bottoming.

Bar and coin demand was down significantly in Q1 compared to last year, whilst Central Banks continued their accumulation, buying 122 tonnes for the quarter, with news out of Russia overnight that their gold holdings have risen to 34.4 million ounces, or over 1,050 tonnes, whilst their divestment of US Treasuries continues.

It’s not just gold demand looking robust, but Palladium too, with Chinese imports rising 25% YTD, amid surging auto production. This coupled with the supply side challenges Palladium (and Platinum) are facing is one reason many are focusing on the PGMs for a trade these days, especially with gold so range bound of late.