[miningmx.com] — Gold fell further below $1 200/oz in Europe on Wednesday, extending the previous session’s losses, as a report that China will not make gold a major part of its portfolio undermined sentiment, and the dollar firmed.
Official sector interest in gold, which has seen a number of particularly Asian central banks increase their reserves and European banks hold off selling the metal in the last year, has been a major support to the metal’s run higher in that period.
However, analysts said given the size of China’s currency reserves, it was unsurprising gold would play only a relatively minor role in its portfolio, and that the news was unlikely to detract from central bank interest in gold if prices fell.
From a technical perspective, the market is likely to find good support around the $1,180 an ounce area, analysts said, with the metal’s longer-term uptrend likely to resume once the correction had run its course.
“With daily momentum oscillators posting their first oversold readings since March, we look for renewed signs of basing ahead of resumption of the cyclical bulltrend, which is still very much intact,” said Barclays Capital in a note.
“Bulls need to regain the 21-day averages at 997/1,231 (in euro and dollar terms, respectively) to regain control.”
Meanwhile, Indian gold jewellers rushed to replenish stocks ahead of religious festivals and other physical buyers in Asia snapped up bullion after prices fell to their weakest in more than a month, dealers said on Wednesday.
The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings slipped to 1,316.481 tonnes by July 6 from 1,318.915 on July 2.
