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12 Mar 2014
New gold high for 2014
FXStreet (Bali) - The precious metal spiked from $1,348.00 up towards $1,360.00 resistance in Asian trading, with metals continuing to be the main market movers.
Amid fears that China may see additional enterprises in the steel sector defaulting, prices of copper, iron ore, steel, are falling sharply. As Tom Essaye, Contributor at Forbes, notes: "Copper is used as collateral for many Chinese companies that can’t get conventional loans from banks. So, they buy copper in the open market, and then pledge the copper as collateral for cash from lenders."
Essaye adds: "When Chaori defaulted last week (Chinese company), it reminded everyone that we may see more defaults going forward, and if that occurs, a lot of lenders may be selling their copper to raise cash—and that could cause copper prices to move substantially lower."
Due to the panic selling in industrial metals, investors have been seeking shelter on the safe-haven appeal of gold, with price currently testing a very important area of resistance at $1,360.00, which if surpassed, may open the doors to a much greater recovery towards $1,400.00 ahead of last Sept 2013 peak at $1,415/30.00.
Amid fears that China may see additional enterprises in the steel sector defaulting, prices of copper, iron ore, steel, are falling sharply. As Tom Essaye, Contributor at Forbes, notes: "Copper is used as collateral for many Chinese companies that can’t get conventional loans from banks. So, they buy copper in the open market, and then pledge the copper as collateral for cash from lenders."
Essaye adds: "When Chaori defaulted last week (Chinese company), it reminded everyone that we may see more defaults going forward, and if that occurs, a lot of lenders may be selling their copper to raise cash—and that could cause copper prices to move substantially lower."
Due to the panic selling in industrial metals, investors have been seeking shelter on the safe-haven appeal of gold, with price currently testing a very important area of resistance at $1,360.00, which if surpassed, may open the doors to a much greater recovery towards $1,400.00 ahead of last Sept 2013 peak at $1,415/30.00.