(Kitco News) - The continued weakness of the Chinese market, and the uncertainty surrounding European and U.S. equity valuations, remain supportive factors for the gold market, said Peter Hug, global trading director for Kitco Metals. 'Deflationary forces continue to dominate, which is most evident in the industrial metals complexes. Copper has a $2 handle and oil is a whisker away from posting a trade in the $20’s,' he told Kitco News on Monday. ‘Everybody is selling everything… and seems to be moving into cash,’ he explained. ‘So you are getting two–sided trading in the gold market; this is trader’s market and extremely dangerous for investors,’ he warned. 'Until, and unless the equity markets stabilize, gold will continue to catch a bid and consolidation above the $1,102 level sets the stage for a test of the $1,122 area. A break below the $1,097 level sets up a test of $1,087,' he said. Gold prices ended the U.S. day session slightly down Monday, on a profit-taking and corrective technical pullback from recent gains that saw prices hit a two-month high late last week. February Comex gold was last down $1.90 at $1,096.0 an ounce. Hug also commented on palladium prices, which managed to start off the year on a weaker tone, falling roughly 12 percent.
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