MTECHTIPS:-Gold Hammered To Five Year Low After Weak Chinese Holdings Data
MCX Gold futures are lingering just above Rs 25K after falling under the watershed markin early moves today. Heavy losses continued for gold as weak Chinese official goldholdings data and a purely bearish set up on the charts pulled down the metal towards itsfive year low near $1100 per ounce. The metal has witnessed heavy losses in last few dayswith no bargain buying emerging even as the Greek debt crisis sent shockwaves through theworld financial markets. The safe haven edge has been lost for gold, according to theprice action in the current year. Apart from a short burst of bargain buying in the firstquarter of 2015, the yellow metal has always been floundering at elevated levels. Countermen is quoting at $1114 per ounce right now, down 1.61% on the day. MCX Gold futuresare trading at Rs 25103 per 10 grams, down 1.55% on the day. MCX Silver futures aretrading at Rs 34020 per kg, down 0.53% on the day.
Gold market was dominated by reports announcing a less than expected built up in theofficial Chinese gold holdings data. The People’s Bank of China (PBoC) has announcedthe first increase to its official gold reserves in six years. China last reported afigure of 1054 tonnes in April 2009 which has risen to just 1658 tonnes right now. This isvery low compared to general consensus. In fact, gold now accounts for 1.65% ofChina’s total forex reserves, against 1.8% in June 2009. This is contrary to thesecular trend of central banks increasing their gold holdings as a percentage of forexreserves.