Gold At 4 Month High – Concerns About China Property Bubble Grow

Today’s AM fix was USD 1,332.75, EUR 969.48 and GBP 798.53 per ounce.
Yesterday’s AM fix was USD 1,333.00, EUR 968.54 and GBP 800.46 per ounce.

Gold climbed $14.30 or 1.08% yesterday to $1,337.80/oz. Silver rose $0.20 or 0.92% at $21.01/oz.

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Gold in Euros, 5 Year – (Bloomberg)

Gold is marginally lower in all currencies today but holding near its strongest level in four months. Concerns about the possibility of the Chinese property bubble bursting affecting economic growth in China and the world is supporting gold. Nervousness over Ukraine, after new acting President Turchinov warned Ukraine is close to default, is also supportive of gold at these levels.

Geopolitical risk has increased as seen in the deepening tensions between the U.S., EU and Russia and is not going to disappear anytime soon. Gold eased 0.15% to $1,335 an ounce after rising as high as $1,338.60 yesterday, its strongest since late October.

Chinese shares plunged in recent days and the Shanghai Composite Index is down 7% in less than a week over fears of a property bubble and the continued depreciation of the Chinese yuan.

Real estate stocks led the fall after media reports over the weekend said that real estate developers lowered house prices and banks halted loans to some real estate businesses.

Government data released on Monday showed home prices dropped month on month in more Chinese cities in January. This should contribute to continuing store of wealth demand from buyers in China.

Indian and Indonesian buyers purchased gold bars. “We are seeing some buying, and there are purchases from India. Other clients are still buying some quantity, about 20 to 30 kilos each time,” a gold dealer in Singapore told Reuters. Premiums on gold bars in Singapore remain healthy at $1.20 to $1.50 an ounce.

The increase in gold ETF holdings could also reflect renewed interest from investors. SPDR Gold Trust, the world’s largest gold exchange traded fund, said its holdings rose 0.41% to 801.61 tonnes on Monday from 798.31 tonnes on Friday.

Gold has risen more than 11% this year in dollar terms, 10% in euro terms and 9.1% in pound terms due to renewed safe haven demand.

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