Broker Sharps Pixley outlines possible reasons for gold price rebound
Precious Metals broker Sharps Pixley has identified rising exports to China and analysis by Citi as reasons why the gold price could stage a recovery.
According to reports on net gold exports from Hong Kong’s Census and Statistics Department, exports were 108.8 tons in May, up from 80.1 tons in April. This makes May the second biggest month ever according to this measure, after March this year, when net exports hit 136.2 tons.
There is an implied correlation between the falling price of gold and rising propensity for buyers to snap up jewelry, bars and coins in Asia. The data for the first five months of 2013 suggest a doubling of net exports to China on the same period last year.
Sharps Pixley also points to data provided via Business Insider, which quotes a technical analyst at Citi, Tom Fitzpatrick, who notes that there was a similar pattern in the price noted in the late 1970s, just before a sustained rally.
The data from the period suggests the price of gold rallied from about $100 to $800 between 1976-1980. Even stripping out the effects of the USSR invasion of Afghanistan toward the end of that period leaves a suggested multiple price increase of 4.5x over three years.