HALIFAX, NS (MINEWEB) - The price of gold dropped briefly below $1,210/oz early Monday (GMT) and silver fell to the low $17/oz-level. Both had recovered marginally at the time of writing but appeared to face significant headwinds with the prospect of heavier selling.
As noted in these pages there were heavy ETF sales Friday, over seven tonnes, and analysts were looking to see what transpires as gold passes near or below $1,200/oz. Many expect significant, further selling, but also point to the possibility that bargain hunters may emerge and boost demand.
As Reuters noted Monday, the price of gold was its weakest since the outset of the year, shaving off nearly all of its gains since January. Silver fared worth, with the gold/silver ratio creeping just shy of 70 reflecting a silver price that hit a four-year low.
Bloomberg reported that net longs in gold fell for a fifth-straight week.
In terms of physical demand, eyes are on Asian more closely now with the open last week of a physical buying platform in Shanghai and the prospect of bargain-price shopping as the gold price drops. The question is whether this may occur around the $1,200 mark. Many observers had expected gold buying to kick in around the $1,300 mark or thereunder.
While demand looks relatively strong from reports out of India, and China, though weaker than the bumper buying last year as the gold price dived, it hasn't been enough to inspire more of a frenzy, at least not yet. Meantime, analysts in the West, especially, watch for action by the U.S. Federal Reserve on interest rates.
Central banks continue to buy, with Russia the latest to release more gold purchases.
