Gold Rises After Historic Drop Supported by Chinese Demand

SadaNews - Gold prices have risen, regaining some of their losses after the sudden disintegration of a record bullish wave that pushed prices down by 13% in just two days. Silver prices have also increased.

Gold rose in spot trading by up to 2.9% to approach $4850 per ounce, after having dropped by about 5% in the previous session, continuing a sharp decline on Friday, the largest in over a decade.

Silver rose by up to 5.1% to exceed $83, after it had dropped by 7% on Monday, marking the largest intraday decline ever recorded on January 30.

Precious metals surged to record levels last month in a swift ascent that surprised even seasoned traders, as investors flocked to gold and silver amid renewed fears of geopolitical turmoil, currency deterioration, and threats to the independence of the Federal Reserve.

Chinese Investors Support Prices

A wave of buying from Chinese speculators contributed to accelerating the rise, but this trend reversed on Friday with the recovery of the U.S. dollar. The extent to which Chinese investors are willing to buy on price declines plays a pivotal role in determining the market's trajectory.

During the weekend, buyers flocked to China's largest gold market in Shenzhen to purchase jewelry and bullion in preparation for the Lunar New Year holiday. Chinese markets are set to close for more than a week starting February 16 due to the holiday.

At the same time, some banks are still betting on a recovery in gold, as "Deutsche Bank" wrote in a note released on Monday, maintaining its forecasts for the metal's price to rise to $6000 per ounce.

By 8:10 AM in Singapore, gold had risen by 2.5% to $4778.16 per ounce, while silver increased by 4.3% to $82.69.

Platinum and palladium prices also rose. In contrast, the Bloomberg Dollar Spot Index fell by 0.1% after finishing the previous session up by 0.3%.