Connect with us

Hi, what are you looking for?

Investing

Ross Norman: Gold’s Record Highs Driven by China, What Happens Now?

To start, he noted that the buying that took gold to the US$2,050 or US$2,100 level was largely high-quality purchases from central banks, which have been adding the yellow metal to their coffers at a strong pace.

‘Central bank buying is quality because it’s unlikely to be sold if there’s a significant price correction. It’s for the very long term — think multi-generational,’ Norman said. He added that Chinese buying also supported that move.

‘(Chinese) retail buying is strong, central bank buying is strong. Institutional buying is strong on exchange-traded funds. Added to that, China is having its Costco (NASDAQ:COST) moment in the sense that Gen Z and Millennials are buying gold — at high premiums might I add — in gold beans,’ Norman continued.

All of those factors were in place earlier this year, but on March 1, when gold started to take off, something changed.

‘It was clear that there was a very significant large player in the market, and they were driving it massively higher,’ said Norman. ‘Spoiler alert — it was more China. Even more than we expected.’

He determined that the buying was coming from speculators on the Shanghai Futures Exchange (SHFE).

‘The Chinese threw themselves speculatively at gold. They took it to an all-time high of US$2,430, US$100 above where we are now. And then the market corrected lower. Now, the reason for that is the exchanges, particularly the Chinese exchanges, (the Shanghai Gold Exchange) and SHFE, significantly increased initial margins, effectively putting a speed bump in terms of trading gold. The COMEX did the same, by the way, as well at the same time. The exchanges are saying these markets are too hot, calm down. We’re going to make it more expensive for you to deal in them.’

Once that happened, Chinese traders became less interested and the gold price pulled back.

‘In a nutshell, if you like, gold has moved higher, significantly higher, to around US$2,100, on quality buying. The last US$200 on top of that arguably is of a vulnerable nature because it’s futures buying,’ he said.

Watch the interview above for more from Norman on what’s going on with gold right now.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

Enter Your Information Below To Receive Free Trading Ideas, Latest News And Articles.






    Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

    You May Also Like

    Stock

    In this edition of StockCharts TV‘s The Final Bar, Dave shows how breadth conditions have evolved so far in August, highlights the renewed strength in the...

    Stock

    Major equity indexes rose on Friday after a selloff that hit the Technology sector especially hard. But this doesn’t necessarily mean that everything is...

    Latest News

    Britain’s Prince and Princess of Wales have released a new photo of Prince Louis to mark his sixth birthday on Tuesday, the first image...

    Latest News

    President Joe Biden travels to Triangle, Virginia, Monday to mark Earth Day, where he’ll unveil $7 billion in grant funding for solar power under...

    Disclaimer: Dealwithbiz.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.


    Copyright © 2024 Dealwithbiz.com