Precious metals fell sharply this morning with gold dropping more than $20 at one stage. Investor sentiment remains shaky following that vicious sell-off in April which accompanied a 174-ton worth of outflows from physically-backed gold ETFs over the month. The outflows have continued into May with a further 13.7 tons already been withdrawn. But there has been a notable increase in physical buying, too, which has lent some support to prices in recent weeks. For example, the US Mint sold some 209,500 ounces of gold coins and bars in April, which was the highest volume since December of 2009. On top of this, demand from China and India have also risen while central banks maintain their net buyer position. Translating all this into price action, it was a healthy sign to see gold hold above key support at $1440 following today’s earlier sell-off. But while, on a closing basis, gold remains below $1480, the price risks remain skewed to the downside. Thus, a break out of this $1440-$1480 range should lead to a sharp move in that direction. China’s latest trade figures, scheduled for early Today, could provide some meaningful direction.
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