Precious metals shrug off Chinese import figures

Overnight, data from the Census and Statistics Department of Hong Kong showed Chinese demand for gold had remained strong in October. The world’s second largest economy imported some 131.2 tons of the yellow precious metal from Hong Kong over the month, which was just shy of the record import volume recorded in March. Yet gold prices have barely reacted to the news, suggesting investors’ focus remains fixated on the still-bearish paper, rather than the physical, market. Indeed, both gold and silver went on extend their losses in the afternoon following the release of some mixed-bag US economic data, which helped to underpin the dollar.

With both the Dow and S&P 500 trading at record highs, stocks still remain one of the very few high-yielding asset classes. Thus until the stock market tops out, and there’s currently no sign of that, then precious metals will likely remain depressed. In the near-term, however, gold prices may find some support as bearish speculators take profit around $1230, a level which corresponds with a long-term trend line, ahead of the Thanksgiving holiday in the US. However if this level gets taken out then I expect to see gold revisit the June low of $1180 before deciding on its next move.