Physical demand is improving below $1,650 with buying in Asia (ex-India) strong on approach of $1,630

Gold is finding resistance on approach of $1,670. In fact, resistance between $1,670 and $1,687 (the 200d MA) is great. For gold to move higher, this range has to be broken first – something we do not expect in the next few days. We believe that rallies towards $1,670 will be sold into. We continue to believe that the metal provides value between $1,630 and $1,600.

Physical demand is improving below $1,650 with buying in Asia (ex-India) strong on approach of $1,630. We have seen a marginal pick-up in the SGE gold premium too ($7.5/oz this morning from around $6/oz at the start of last week) – another indication that dips in gold are being bought into. Although Indian demand remains low, we do expect demand to pick up in April as the Akshaytritya festival in late April is fast approaching. This is the second-biggest gold festival in India.

The rally in the US 10-year government bond yield moved rapidly higher early last week on the back of higher growth expectations. The yield moved from 2% to 2.4% in a few days but has since retreated to 2.25% again. Silver is finding strong resistance on any rally. We believe that it will continue for a few more months. We still think rallies above $35/oz are likely to fade. However, we also believe that when the silver market conditions improve, the price could move sustainably above $35/oz again. Gold support is at $1,652 and $1,630. Resistance is $1,660 and $1,644.