The Week In Hindsight, 24 January 2014

Spot gold continued to regain lost ground this week, supported by a new unease surrounding emerging market growth and financial stability. Commerzbank’s Corporates and Markets team stated in a research note on Friday that spot prices are unlikely to prove sustainable at or above the current levels of $1260 per ounce.

The banking group referenced reduced investment demand, confirmed an ongoing outflow from exchange traded products as a major factor, and also cited emerging market currency weakness and capital controls as the cause for a lack of jewellery demand coming in from Asia.

Despite the diminishing medium term investment case for the metal, debt levels in China and the devaluation of other junior market currencies do have the potential to provide a period of redemption for gold investors. This is as the entire time that uncertainty grips global markets; catastrophe risk insurance could possibly see some renewed demand.

Spot Gold 2 Hourly Chart