Sketching Gold Market for a Week

Gold Sketch

So far this week, the European Central Bank (ECB) cuts interest rates, the U.S. non-farm payrolls came better than expected and to the contrary, the Chinese Purchasing Manger’s Index (PMI) China announced were lower than expected.

The physical demand on gold increased all over the world, although the Reserve Bank of India (RBI) tightened the Indian demand with new rules to decrease their balance sheet deficient, and China boosted this rate higher during the holidays buying $16 billion worth of gold, according to the Chinese media. The U.S. Mint reported a historic increase in sales during April totaling 209,500 ounces gold coins.

The Japanese markets celebrate the Children’s day today, May 6th, as part of their Golden Week holidays, while Eastern Europe and the Middle-East celebrate Easter.

Equities market, in general, rose considerably, with the DOW, S&P 500, NASDAQ closing on greens, while the Chinese market closed reddish because the lower than expected PMI.

Gold production still faces difficulties in financing or finding new projects, resulting in ongoing decrease in gold production. Two informal mines collapsed, and Eldorado Gold Corp., one of the largest mining companies, reports Q1 2013, a whooping 45.4$ million loss in the stock market. On the bright side, Logi Gold and Haber Inc. reported a new HGP4 process in gold production instead of hazardous mercury. But this new technology still has months to be implanted.

Gold prices ended this week flat closing at $1,470.62 after putting a good fight with the bears. Although some technical indicators show signs of buying like MACD indicator, the SMA and price channels are a bit worrying. Moreover, Fibonacci retracement shows advantage for gold shorts.

A weekly survey by Kitco showed that gold bears have a slight advantage next week, but as a gold bug myself, I hope for some good news and physical buying through Easter could hold against the next raid. Placing bets on gold almost never lost, especially in times of needs and dire, like the ones we are living in right now.

This week maybe a tough one for gold, but the yellow metal showed strength despite the recent drawbacks.