Developments over the past week in both China and India could have bearish
implications for the price of gold, according to a recent report by TD
Securities. In a note to clients this morning, precious metals strategist Steve
Scacalossi wrote that After the Christmas weekend the precious metals complex
drifted lower. Gold opened right on its day highs and never looked back with a
deluge of sell orders towards $1,607. This is somewhat surprising given news
yesterday out of China where the head of research for the Peoples Bank of China
was quoted as saying that the country should buy more gold when prices are
relatively low. Support for gold is at $1,575 and then major support at $1,500
as per todays chart. The TD strategist added that In other news, China has
restricted gold spot and futures trading to the Shanghai Gold Exchange and
Shanghai Futures Exchange as part of efforts to crack down on illegal buying and
selling of commodities." As for India, Scacalossi noted that "Indian gold
demand may drop as much as 50% in December after a plunge in the reminbi drives
up local prices. Imports may total 35-40 tons this month compared with 70-75
tons a year ago as per the Bombay Bullion Association. From a technical
perspective, he contended that Gold has broken short term support and is
vulnerable to a test of 1560.
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