Gold Sees Modest Follow-Through Buying Following Monday Gains

By Paul Ploumis (ScrapMonster Author)

January 06, 2016 07:07:51 AM

(Kitco News) - Gold prices ended the U.S. day session modestly higher Tuesday. Some more safe-haven buying and short covering in the futures market were featured, following decent gains posted Monday. Unrest in the Middle East and weak Chinese economic data released Monday have worked in favor of the yellow metal early this week. February Comex gold was last up $2.90 at $1,078.10 an ounce. March Comex silver was last up $0.154 at $13.995 an ounce.

There was still some anxiety in the marketplace Tuesday, but not as much as Monday. China’s central bank on Tuesday injected 130 billion yuan in short-term funds into its banking system and also intervened in the foreign exchange market to support the yuan. This helped to somewhat stabilize Asian stock markets following Monday’s strong selling pressure. Still, Chinese and world stock indexes were feeling a bit more selling pressure Tuesday. U.S. stock indexes were also lower in afternoon trading Tuesday.

What has been a surprising development this week is the inability of crude oil prices to rally in the face of significantly heightened tensions in the Middle East. In recent years, such developments would have quickly popped the price of crude oil by at least several dollars a barrel. However, this week the worries about a worldwide oil glut and slowing worldwide economic growth (meaning less demand for oil) are trumping the Middle East friction to keep oil prices from rallying. It’s somewhat ironical that crude oil prices seeing some selling pressure Monday also helped to pressure the U.S. stock market.

In other overnight news, inflation in the Euro zone remains stubbornly low. The European Union statistics agency on Tuesday reported consumer prices in December were up 0.2%, year-on-year. A rise of 0.3% was forecast. The European Central Bank wants to see an annual inflation rate of 2.0%.

Courtesy: Kitco News