Gold flirts with a new record high. Eyes on China and bonds

Gold is shining once again today and nearing a record high. It’s up $22 to $2683, just short of the $2686 record set on September 25.

I spoke to Kitco last week on the outlook for gold and highlighted the strength on Thursday and Friday and how that was a good sign.

“It’s just impressive, the last two days,” he said. “I was seeing it
weakening this week and I thought, ‘Yeah, that makes sense. I don’t like
it, but it makes sense.’ And now it’s come back pretty strong here, 50,
60 bucks in a couple of days. I take that to be a good sign.”

Adam Button, head of currency strategy at Forexlive.com, said that he’s neutral on gold for the coming week, but it’s shown impressive resilience in shaking off broad U.S. dollar strength and rising Treasury yields.

“The gold market didn’t get any good news this week, not that I can see,” he said. “The news flow was dollar-positive and bonds sold off, yet gold held in there. It started out weak early in the week, banging around. Now gold’s finishing near flat on the week. That’s a win in a tough week for news.”

“I’m skeptical that can continue indefinitely but that’s a good sign for now.”

Perhaps I was wrong to be skeptical but this week, Treasury yields have tracked lower and that’s turned into a tailwind for gold.

Moreover, China’s stimulus hasn’t been enough to maintain the rally in stock markets. The MCHI ETF has now given back more than half of the rally since early September. That could nudge Chinese investors back into gold.

This article was written by Adam Button at www.forexlive.com.