Spot gold has been steady overnight into this morning, in very light trading. US markets are closed today in observance of the Martin Luther King Jr holiday. Spot gold closed with healthy gains Friday, settling at $1,088.80 an ounce. This is almost exactly in the middle between the day’s high and low of $1,098.50 and $1,079.60.
February gold futures are also steady, after closing a big $17.10 an ounce higher on Friday.
Safe Havens and Holidays
Fears that the slowdown in China’s economy is worse than the government is letting on, and global stock markets continuing to fall, are increasing demand for gold as a safe haven.
While US markets are closed today for MLK Day, the holiday that has a real effect on gold is the Chinese Lunar New Year, occurring on February 8th this year. Jewelers across Asia have stocked up on gold bullion to make jewelry, and the retail investor demand is beginning.
Retail precious metals investors in the US are buying with both hands, as 4 million American Silver Eagle coins were sold in the first week. 75,000 troy ounces of American Gold Eagles of all sizes, and 23,500 Gold Buffalo 1 oz coins were sold during the same period.
Revenge of the Ayatollahs
However, the big news in the commodities markets today is that international sanctions have been lifted on Iran, after they met the conditions set forth to de-weaponize their nuclear program. Iran, which had been allowed to export 1 million barrels of oil a day under the sanctions, immediately announced that production would increase by 50% to 1.5 million barrels a day. This is still half of Iran’s peak oil production before sanctions were implemented. The news sent oil futures sharply lower yet again, with Brent crude falling below $28 a barrel for the first time since 2003.
In what is perhaps the starkest example of the meltdown in the US fracking sector, low quality shale oil from North Dakota is now quoted at below $0. Yes, the drillers now have to pay the refiners to take the low quality crude, since so many millions of barrels of high quality oil is sitting in storage. Friday saw Brent crude fall by 6.3%, and Nymex crude fall by 5.7%, with few traders willing to stick their necks out and call a bottom.
Gold Technical Outlook for Monday
Gold saw sizable gains on Friday, and have been holding on to those gains this morning. Very light volume leaves the market susceptible to swings on large orders. We’re looking at support around the $1,080 level, then $1,071. First resistance should be at $1,098, then $1,104.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product