Gold gives up overnight gains in early trading

(USAGOLD – 1/21/2020) – Gold gave up some of last week’s gains after reaching the $1567 in overnight trade.  The metal is priced now at $1550 – down $11 on the day. Silver is down 39¢ at $17.67. With little in the way of news to explain the downside, we will lay the blame, at least for now, on sympathetic selling relative to palladium’s significant drop this morning – down $84 (about 3.5%) from record highs. Platinum is also down sharply. Reuters is reporting a sharp drop in China’s gold consumption last year due, according to the China Gold Association, “to downward pressure on the Chinese economy and rising prices for the metal in the second half of last year.” Gold jewelry demand was down 8.2% for 2019.  Coin and bar demand was down 27%. Reports of a new and highly contagious coronavirus showing up in China are not helping matters this morning.

Despite the poor showing for 2019, the World Gold Council’s Ray Jia sees Chinese physical gold demand getting off to a fast start in 2020 as the January 25 lunar New Year approaches. In a report posted yesterday, he says “buying ‘something gold’ is a long-standing new year tradition in China. Firstly, gold has been considered a sign of good luck or fortune for millennia, something significant as many look forward to what the new year will bring. . . Secondly, driven by year-end bonuses, Chinese consumers’ purchasing power is usually the highest before Lunar New Year. This is supported by our 2019 global consumer research findings, which indicate that higher incomes lead to higher gold consumption.” China’s gold market, says Jia, is “in a festive mood” for the Year of the Rat – the zodiac animal representing wealth and surplus.

Chart of the Day

Graphic image of world wealth by country
Visualization courtesy of HowMuch.net

Chart note: “The U.S. remains by far the richest country in the world,” says HowMuch.net, “controlling some $105.99T of wealth, or almost 30% of the entire world’s net worth. Taken together, countries in Asia have a higher net worth than the U.S. at $141.21T, or about 39% of the world’s total. The poverty of underdeveloped countries is also obvious in our visual. Africa and Latin America only control 1.14% and 2.75% of the world’s wealth, respectively. The U.S., Europe and China control comparable amounts of the world’s wealth, indicating how important trade relationships are to the global economy.”

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