Gold - physical interest coming out of Asia, mostly China, on approach of the New Year celebrations

Despite lacklustre activity, gold managed to hold on to it gains in overnight trading. We are seeing decent physical interest coming out of Asia, mostly China, on approach of the New Year celebrations there that will occur earlier this year than usual.

Investor support is mild, although ongoing tensions in Iran have been keeping interest alive.
US vehicle sales data, released overnight, was mildly supportive of PGM. Total vehicle sales for December were slightly better than expected, at 13.52m (consensus: 13.5m), but still a drop from the 13.59m seen in November. Growth in Japanese vehicles sales declined to 23.5% y/y in December, from 24.1% y/y in November. Given the relatively modest nature of these changes, PGM markets seem to be ignoring the data, rather following the general trend of the rest of the precious metals complex.

Once again, movements in the dollar seem to be most crucial in dictating the path for precious metals today. As long as confidence in the Eurozone is being undermined, we could see a strengthening dollar cut into any upside for Gold, which might result from safe-haven demand. We don’t expect much market activity today as participants remain on the sidelines ahead of tomorrow’s non-farm payrolls data.

Gold support is at $1,596 and $1,582. Resistance is $1,623 and $1,634.