Gold and Silver Correct Ahead of Chinese Markets Close
Gold and silver corrected slightly after the previous rally, as investors assessed the impact of the Chinese market closure for the Lunar New Year holiday. The precious metal weakened by as much as 0.8% as Chinese trading activity—which in recent weeks has been the main driver of silver and other metals—will be absent for more than a week, providing a test of whether the trend remains strong without volume driving it.
According to BullionVault, China's dominance in physical gold flows has existed for more than a decade, but what has most driven global prices recently has been the explosion of speculation and derivatives from Chinese market players. The Shanghai Gold Exchange and Shanghai Futures Exchange are scheduled to close from late Friday until February 24, making the global market potentially more sensitive to order flows from outside China.
In silver, the situation is more heated: strong domestic Chinese demand and a backlog of orders have caused short-term contracts on the Shanghai exchange to trade at a large premium to longer-term contracts—a signal of tight supply and aggressive physical demand. The exchange also changed rules to restrict certain parties from carrying hedging silver contracts until delivery, a move seen as helping to stem the outflow of warehouse stock amid tight supply.
Market focus now shifts to US data, particularly Friday's core inflation release, as the Fed's interest rate path remains a major variable for precious metals. Gold remains above $5,000/oz and has recovered about half of its sharp decline earlier in the month, while several major banks remain bullish (driven by geopolitics, Fed independence issues, and a shift away from traditional assets). At 12:20 p.m. London time, spot gold was down 0.4% at $5,063.53/oz, while silver was down 1.8% at $82.81/oz. (alg)
Source: Newsmaker.id
