After a mostly stagnant week of trading, gold and silver finished last Friday by making fresh weekly highs and breaking through previous resistance levels. Gold decisively closed above $1,180 on Friday and despite an uneventful trading day yesterday, it has caught bids yet again today after forming a base in this higher range. Stops in silver were triggered at $16 on Friday and it quickly shot up to an intraday high of $16.40. There is now a double bottom at $16 from yesterday and today which is buoying the market. The near term objective to the upside is the 50 day moving average at $17.15.
USD weakness, largely due to German economic sentiment beating expectations, has given gold extra legs today. The SPDR gold ETF saw the first inflow of ounces being added since November 3rd. Overall holdings in the world’s largest gold backed ETF now stand at 723 tons (23,244,450 ounces). Chinese physical demand is also staying marginally elevated and is trading at a $2-3 premium over London spot gold. In India, the central bank (Reserve Bank of India) is in talks with the government to increase curbs on gold imports. Developments on this should be watched closely and an announcement could be made as early as this week. Imports of gold into India in October jumped fourfold from a year earlier to $4.2 billion, raising concern about India’s balance of payments.