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Gold Prices Slips vs Rising Dollar as US Retail Sales Grow, China Slowdown 'Concerning'

GOLD PRICES slipped to 7-session lows against a rising Dollar in London on Friday, dipping below $1235 per ounce as the US reported better-than-expected retail sales growth but China’s economic data missed analyst forecasts.
 
While the US said retail sales outside automobiles, gas and food rose strongly in November, China – the world’s second-largest economy and the No.1 gold consumer nation – reported its slowest annual pace of retail sales growth since 2003 and the slowest rise in industrial output since New Year 2016.
 
Copper and crude oil prices fell on China’s news, holding a 15% and 8% drop for 2018 to date respectively.
 
“The need for cutting taxes, fees and interest rates has further increased,” reckons one Chinese bank’s chief economist.
 
“Insufficient demand has become the main problem.”
 
“Until the Opec [oil cartel’s output] cuts start kicking in, the [energy] market is oversupplied in the short term,” reckons Japanese group Mitsubishi.
 
“If China is slowing down, that’s definitely a concern.”
 
“Another slow day for Asia with very little to report,” says the latest gold trading note from Swiss refiners and finance group MKS Pamp, with only “tiny flows” in the market.
 
Shanghai gold prices held firm in Yuan terms overnight, keeping the premium over London quotes – a measure of local demand and supply conditions – above its historic average of $9 per ounce.
 
Chart of China gold premium over London. Source: World Gold Council
 
Silver prices dropped Friday morning below $14.60, some 1.5% beneath yesterday’s 6-week high.
 
Platinum prices also slipped below last week’s finish, trading at $792 per ounce – some 4.5% above August’s 15-year low.
 
Korean auto-giant Hyundai said this week it’s investing $6.7bn to grow production of fuel-cell vehicles – needing platinum as a catalyst for making energy by mixing hydrogen with oxygen – to half-a-million per year by 2030.
 
Beijing said today it will suspend an additional 25% tariff on US-made vehicles for 3 months starting New Year’s Day, part of the trade-war “truce” agreed by Donald Trump and his Chinese counterpart Xi Jinping at the recent G20 summit of world leaders.
 
“[But] the ongoing trade war remains a headwind, truce or no truce,” says US brokerage Brown Brothers Harriman.
 
Eurozone manufacturing growth meantime showed a slowdown on the Markit data agency’s first-flash December surveys, while consumer-price inflation in Italy missed analyst forecasts by holding at 1.6% per year for November.
 
“In some parts of [recent years], QE has been the only driver of this recovery,” said European Central Bank president Mario Draghi on Thursday after holding interest rates and the total stock of QE asset purchases unchanged for the 19-nation Euro currency union.
 
Asked if the ECB is ready to use asset purchases in 2019, “Well, we didn’t have to discuss this because we decided that our baseline is still valid,” Draghi said.
 
“Wages have been steadily increasing since 2016…This [is] quite broad based, not limited to one country [and] across sectors.”
 
Against a Eurozone average of 2.1% however, “negotiated wages in some sectors in Germany are [rising] between 4% and 6%…Profits are being squeezed [and so pricing] pass-through will happen.”
 
Gold priced in the Euro traded just €1 below last Friday’s finish, holding at €1095.
 
The UK gold price in Pounds per ounce meantime held a 0.3% weekly gain at £984 after British Prime Minister Theresa May failed to win further clarification or reassurances for lawmakers at home over the Irish border “backstop” part of her EU-Brexit deal from other European Union leaders.
 
British citizens won’t need a visa to visit EU states after the Brexit transition period ends in 2012, the European Commission said today, but will have to pay a €7 fee.

Gold Price Slips as US-China Dispute Turns to 'Hostage Taking', ECB Maintains QE Holdings 'In Full', May Gets Back to Brexit

GOLD PRICES held a 0.5% drop for the week so far in both Dollar and Euro terms on Thursday even as the US-China trade dispute turned to “hostage taking” in the words of one specialist.
 
The UK gold price in Pounds per ounce also retreated, dropping back to last week’s finish at £980 after Britain’s sudden leadership crisis was resolved and Brexit discussions with the European Union recommenced.
 
Fresh from winning the backing of two-thirds of her Conservative Party’s Members of Parliament in Wednesday’s sudden vote of confidence, Prime Minister Theresa May said there will be “no immediate breakthrough” in renegotiating the terms of Britain’s withdrawal agreement with the EU ahead of 29 March’s Brexit.
 
But attending an emergency summit with EU leaders in Brussels, “I do hope…we can start work as quickly as possible on the assurances that are necessary” for UK lawmakers over the open-ended commitment to an Irish border backstop, she added.
 
As gold prices slipped to $1242 on Thursday Asian stock markets rose around 1% on average while the Eurostoxx 600 index extended its rally from Monday’s new 20-month low to 3.2%.
 
Shanghai gold prices meantime held flat against a rising Yuan, widening the premium for bullion delivered inside the world’s No.1 consumer market to $9.30 over comparable London quotes.
 
Ahead of the peak gold-buying run up to Chinese New Year – falling on 5 February 2019 – that marks only the 5th time since early-October’s National Week holidays that Shanghai’s incentive for new bullion imports has exceeded its historic average around $9 per ounce.
 
A second Canadian citizen was meantime arrested in China on Wednesday, widely seen as a tit-for-tat response to Canada’s arrest of Chinese tech-giant Huawei executive Meng Wanzhou for extradition to the United States following this week’s earlier arrest of ex-diplomat Michael Kovrig in Beijing.
 
A “fixer” for ex-basketball star Dennis Rodman’s meetings with DPRK dictator Kim Jong-un – Michael Spavor is “suspected of engagement in activities that harm China’s national security” according to state news agency China Daily.
 
“It is clear the Chinese government wants to put maximum pressure on the Canadian government,” reckons Guy Saint-Jacques, a former Canadian ambassador to Beijing.
 
“We’re seeing the normalization of international hostage-taking for political purposes, in real time,” says Seva Gunitsky, politics professor at the University of Toronto.
 
“The trade war between US and China remained the major event in 2018,” says a 2018 gold-market review from analysts Refinitiv (formerly Thomson Reuters GFMS), “[but it] had little positive impact on gold, pushing the price down after trading substantially above $1300 in first two quarters.
 
“The recent truce between China and the US may drive the Dollar down and be beneficial to gold, but the current interest rate increase timetable might limit the upside.”
 
Chart of the US trade deficit with China vs. Dollar gold prices. Source: St.Louis Fed
 
As the UK’s ruling Conservative Party held its vote of confidence on Wednesday, the European Parliament approved a new “economic partnership with Japan – the biggest trade zone ever negotiated” according to EU Trade Commissioner Cecilia Malmstrom, and covering nearly two-thirds of global economic output.
 
Forecast to save EU consumers €1bn per year on lower prices for Japanese goods led by automotives, the deal sees Tokyo recognize over 200 “geographic brands” such as Roquefort cheese and Polish ‘Wodka’ and makes some 85% of European food and drink exports tariff-free.
 
“Everything is uncertain with the United Kingdom for the moment,” Malmstrom added, “but one day or another we’ll have to negotiate something…[and will probably] go even further” than the Japan deal.
 
Euro gold prices today held a €4 loss for the week so far at €1092 per ounce after the European Central Bank kept its key interest rates unchanged – including the deposit rate of minus 0.4% for commercial banks – and confirmed it will end new quantitative easing this month after buying €2.5 trillion of corporate and mostly government debt over the last 3 years.
 
“Enhancing its forward guidance” however, the ECB added the words “in full” to its plans for reinvesting money from maturing bonds back into new purchases of Eurozone debt, seeking to maintain “favourable liquidity [and] ample monetary accommodation…for as long as necessary.”

Gold Price 'Could Hit $1400' in 2019 as GLD Expands, UK Hits Leadership Crisis 15 Weeks Before Brexit

GOLD PRICES edged higher for Dollar investors on Wednesday morning but slipped against the Euro and British Pound as the UK’s ruling Conservative Party called a vote of no confidence in Prime Minister Theresa May and her handling on the Brexit process – set to see Britain leave the European Union 15 weeks from now.
 
Euro gold prices held below €1100 per ounce – yesterday’s new 6-month high – as the single currency rose following stronger than expected Eurozone industrial data and flat US consumer-price inflation figures.
 
Rising $5 to $1246 per ounce, the gold price in US Dollar terms held $3 down for the week so far.
 
It has now averaged $1269 per ounce in 2018, adding 0.9% for the year after adding 0.6% in 2017.
 
Having forecasted an annual average price of $1312 for 2018, Chinese-owned bullion bank ICBC Standard now forecasts a 2019 price of $1293 and then $1300 in 2020.
 
Chart of annual average gold price in US Dollars. Source: St.Louis Fed
 
US financial services group Bank of America-Merrill Lynch meantime forecasts a spike as high as $1400 per ounce for next year, led by volatility in other financial assets.
 
“True, gold prices will not spike until there is a meaningful shift in some the recent market trends,” BAML analysts explain.
 
“But we believe the spike in the VIX [index of US stockmarket volatility] is already setting the stage for that reversal, while the twin US trade and government budget deficits could come into focus as we head into 2019.”
 
The New York-listed SPDR Gold Trust (NYSEArca:GLD) – the world’s largest gold-backed ETF – yesterday grew 0.4% in size as investor demand expanded.
 
Needing 763 tonnes of gold to back its shares however, the GLD has barely changed in size since this time last month, back when gold prices were trading over $40 below today’s level.
 
Chart of SPDR Gold Trust (NYSEArca: GLD) vs gold price. Source: BullionVault
 
Back in London, and forced to cancel a meeting with Ireland’s Prime Minister Leo Varadkar – part of her sudden tour seeking a renegotiation of the key “Irish backstop” and trade deal elements of her Brexit package – Theresa May today vowed to win her colleagues’ support, warning that “the only people whose interests would be served” by a Tory Party leadership election this close to 29 March are avowed socialist opposition Labour Party leader Jeremy Corbyn and his shadow chancellor John McDonnell.
 
Gold prices fell however for UK investors as the Pound regained half this week’s drop versus Dollar, slipping below £990 per ounce – a 15-month high when reached on Monday’s decision to cancel Parliament’s key vote on May’s Brexit deal with the European Union.
 
“The clock is ticking on a ‘No Deal’ exit,” says one spread-betting bookmaker, “although there is now a higher chance that we could see Article 50 delayed to allow the UK more time.”
 
UK government borrowing costs meantime rose on the bond market today, while the FTSE250 index of UK-focused businesses added 1.2% – lagging other European nation’s domestic share indices – 
 
“For the moment we can kiss goodbye to rationality as sheer politics take over and the issues are consigned to the back seat,” says long-time Brexit proponent and blogger Richard North, forecasting that the UK  “could end up with an unreconstructed ‘ultra’ knuckle-dragger” as Prime Minister, “although the ‘no deal’ outcome remains a possibility whatever happens.
 
“Just when we needed people absolutely focused, the Westminster bubble is set to take time out, and indulge itself.”

Gold Price Slips $5 But 2019 Rate Outlook 'Supports', Hedge Funds Slash Bearish Betting on Comex

GOLD PRICES gave back a $5 rise in US Dollar terms after recovering last week’s closing level in London on Tuesday, trading down at $1244 per ounce as world stock markets rallied, government bond prices edged back, and the British Pound steadied on the FX market after Monday’s latest Brexit-crisis slump.
 
Stabilizing above $1.26 in US Dollar terms, Sterling held the UK gold price in Pounds per ounce above £990, some £6 shy of yesterday’s 14-month high.
 
Prime Minister Theresa May meantime met European Union leaders to try and renegotiate the Irish “backstop” – the open-ended commitment to EU rules which forced her to cancel Parliament’s “meaningful” vote on her Brexit deal for fear of a crushing defeat.
 
Data released overnight showed hedge funds and other speculators slashing their bearish betting on Comex gold futures and options last week.
 
As a group, the so-called Managed Money category made the fastest positive jump in its positioning since those traders pulled back from a record-heavy bearish position in mid-October.
 
Chart of Managed Money net Comex gold futures and options position. Source: BullionVault via CFTC
 
Hedge funds also slashed their bearish betting against silver last week, cutting the net negative position by 30% to a 4-week low.
 
Silver prices over that period rose 1.4% as gold added 0.7% in US Dollar terms.
 
The price of platinum in contrast continued to fall, losing 3.7% over the week-ending Tues 4 December as the Managed Money slashed what had been a net positive position very nearly to zero.
 
“Platinum pricing remains heavy underneath $800,” says a trading note today from MKS Pamp, the Swiss refiners and finance group, “and it is difficult to see and drivers for a move back above the figure.”
 
Over on the interest-rate market, speculators have meantime slashed their betting on 3 or more US Fed rate hikes by this time next year from 59.8% to just 16.1% likelihood according to data from the CME  futures exchange.
 
Next week’s widely expected rate hike to a ceiling of 2.50% “will be the last one for a long time” reckons Paul Tudor Jones of the $4bn Tudor Investment Corp.
 
“Fed funds futures pricing,” agrees Chinese-owned bullion bank ICBC Standard’s analyst Marcus Garvey, “has been reducing the market expectations for hikes over the next 18 months and that has been coming through in a slightly softer Dollar and a stronger gold price.”
 
Over in India gold priced in the weakening Rupee rose Tuesday back towards October’s 27-month highs – costing INR 32,650 per 10 grams after accounting for the No.2 gold consumer nation’s 10% bullion import duty – as opinion polls said the ruling BJP Party is facing its biggest regional election defeat since leader Narendra Modi become Prime Minister in 2014.
 
A Canadian ex-diplomat was meantime arrested today in No.1 gold miner, importer and private consumer China, reportedly in a tit-for-tat response to the Toronto court hearing for extradition to the United States of tech-giant Huawei executive Meng Wanzhou.

UK Gold Price Hits 6-Month High as May 'Cancels' Brexit Vote, Gilets Jaunes Hit France GDP

GOLD PRICES slipped against all major currencies except the British Pound on Monday morning, retreating from last week’s multi-month highs as world stock markets fell and bond yields rose, writes Atsuko Whitehouse at BullionVault.
 
The UK gold price in Pounds per ounce set fresh 6-month highs however, rising to £986 per ounce, as Sterling fell on news that Prime Minister Theresa May is going to cancel tomorrow’s crucial Parliamentary vote on her EU-Brexit deal to avoid a crushing defeat.
 
With gold prices for US and Euro investors slipping to $1244 and €1090 respectively, London’s FTSE100 was also the only major global equity index to avoid a loss, adding 0.4% as the Pound fell on the FX market.
 
Rumors that May will formally cancel the Brexit vote at 15:30 London time began after the European Court of Justice found in favor of anti-Brexit UK politicians in one of its fastest judgements on record.
 
The ECJ confirmed that London can revoke the Article 50 notification of its intention to withdraw, made with a 2-year deadline in March 2017, without needing permission from the other 27 member nations.
 
Chart of UK gold price in Pounds per ounce
 
The US Dollar Index – a gauge of the greenback’s value versus six major currencies – meantime edged higher after posting its biggest weekly drop in more than three months on a weak US jobs report and what analysts called a “dovish tone” in Federal Reserve comments.
 
Speaking at an event in Washington last Friday, Fed governor Lael Brainard said the economic picture was broadly positive but that risks were growing overseas and in the corporate debt markets at home.
 
Tailwinds for global growth are fading, she said, as financial conditions tighten and the boost from fiscal stimulus moderates. 
 
The Fed is now in a blackout period with no scheduled public speeches ahead of its Dec. 18-19 policy meeting.
 
“A number of tailwinds are in place for it gold prices to move significantly higher during the month,” reckons brokerage INTL FCStone analyst Edward Meir, “including falling US interest rates, a declining or at least a stalling Dollar, wobbly US equity markets.
 
Beijing meantime demanded on Saturday that Canada release Meng Wanzhou of Chinese tech-giant Huawei, arrested for extradition to the United States, with Vice Foreign Minister Le Yucheng separately summoning both the US and Canadian ambassadors to lodge a “strong protest”.
 
No decision was reached at Friday’s extradition hearing after nearly six hours of arguments and counter-arguments, and the hearing was adjourned until later today.
 
White House trade adviser Peter Navarro said on Friday US tariffs on Chinese goods would go up again if China offered no substantial concessions by March 1. 
 
Chinese export data published Saturday showed growth in November was barely half what economists had expected and ony a third of October’s pace.
 
Chinese consumer price inflation published Monday also undershot forecasts for the month. 
 
Democrat Party politicians on the House Intelligence Committee “will want to look into” allegations of collusion between the Trump 2016 election campaign and Russia, according to a Republican member of the committee.
 
“In all,” says the Washington Post, “Russians interacted with at least 14 Trump associates during the campaign and presidential transition, public records and interviews show.”
 
Back in Europe, and after a fourth weekend of rioting and disruption across France by the so-called “gilets jaunes” or “yellow vests” protesters, President Macron was scheduled to make a televised address this evening, with pundits forecasting tax cuts for lower-paid workers.
 
“French growth is set to slow close to a standstill in the final quarter as waves of anti-government protests hit business activity”, the Banque de France estimated on Monday, downgrading its outlook.

Gold Price Sees Best Week Since March as US Jobs Miss Forecast

GOLD PRICES headed for their best week in Dollar terms since March in London on Friday, nearing a 2.1% gain after US jobs data for November badly missed Wall Street forecasts.
 
With analysts expecting growth of 200,000 in non-farm payrolls, the Bureau of Labor Statistics reported a 155,000 net addition and also cut October’s figure by 5%.
 
The Dollar fell to this week’s lows against the Euro currency at $1.14 as gold prices held above $1243 per ounce.
 
Gold priced in Euros had earlier edged back above €1090 after new data said the 19-nation currency union slowed to 1.6% annual economic growth between July and September with the weakest quarterly GDP change in 4 years.
 
“A peaking US Dollar creates upside room for gold,” says the latest analysis from Marcus Garvey at Chinese-owned bullion bank ICBC Standard.
 
“Specifically, we believe that the [US Fed] will hike at a slower pace…becoming more cautious as real short-term interest rates approach their estimated equilibrium level.”
 
“Gold prices have declined so far this year,” says Dutch bank ABN Amro, “but 2019 and 2020 should be positive again.”
 
Keeping ABN’s year-end target for 2019 at $1400 per ounce, “speculators [currently] have little faith in the upside potential for gold prices,” the bank’s Georgette Boele says.
 
“But we think the risk reward for entering long gold positions is quite attractive.”
 
ICBC also points to late-2018’s position on Comex gold derivatives among non-industry traders, calling it “abnormally low”. 
 
Chart of non-commercial traders' net speculative position in Comex gold futures. Source: ICBC Standard Bank
For gold prices to fall in 2019, ICBC says, would require an “extension of US growth outperformance, with increased productivity growth…steepening the yield curve, as the [Fed] hiking cycle continues.”
 
Analysts at Germany’s Commerzbank this week said they expect the gold price to reach $1350 by the end of 2019.
 
Holding 14 tonnes of gold bullion in custody meantime for the government of Venezuela, the Bank of England has been urged to cancel a meeting with Caracas’ finance minister and central bank chief apparently scheduled for today.
 
With 3 million people fleeing Venezuela since 2015 amid hyperinflation, food and power shortages, the rise of death squads and the collapse of law, “The most egregious of [Venezuela’s] corrupt systems is the currency exchange system…under the control of [those] two individuals,” says a letter from UK lawmaker Andrew Lewer MP.
 
Finance minister Simon Zerpa is under sanction by the US. His predecessor Alejandro Andrade was last month sentenced to 10 years in jail by a US court for taking over $1 billion in bribes for giving wealthy contacts favorable exchange rates on foreign currency transfers amid Venezuela’s tight exchange controls.
 
Maduro yesterday ended a 3-day trip to Moscow by announcing a deal for $5 billion of Russian investment into Venezuela’s oil sector and a further $1bn into its gold-mining industry.
 
New UK data today put house-price growth in the world’s 5th largest economy at its weakest since 2012 as politicians continue to debate next week’s key parliamentary vote on Prime Minister Theresa May’s deal with the European Union for Brexit in March.
 
With consumers now fearing inflation in the cost of living of 3.2%, the fastest pace expected on the Bank of England’s survey in 5 years, the UK gold price in Pounds per ounce today rose back to this week’s 5-month highs above £974.
 
Kent County Council yesterday forecast gridlock on the region’s roads, disrupting schools, hospitals, local government, migration control and business including food delivery in the event of a ‘no deal Brexit’ causing delays to freight moving through Dover.
 
The UK’s nearest port to mainland Europe, Dover handled 2.6 million lorries in 2017, the 5th new record year in a row.
 
Several major French retail chains said today they will shut this weekend, as will some major tourist sites in Paris, in anticipation of more violent protests by the so-called ‘gilets jaunes’ who this week forced President Emmanuel Macron to suspend planning ‘green tax’ hikes on energy and fuel.
 
China meantime demanded the release from Canadian custody of tech-giant Huawei’s chief financial officer Meng Wanzhou for extradition to the United States over allegedly breaching US sanctions against Iran.
 
A major provider of telecoms equipment worldwide, Huawei has apparently “caved in” to requests from the UK’s GCHQ National Cyber Security Centre to fix technical “shortcomings” in its telecoms equipment vulnerable to hacking.

Gold Prices Firm, Gold ETFs 'Resilient' as Stock Markets Fall Amid New US-China Tensions

GOLD PRICES held firm in all major currencies Thursday morning in London, supporting gold ETF trust-fund share prices as world stock markets sank on fresh worries over the inverted US yield curve and worsening US-China tensions.
 
European equities extended a sharp drop in Asian stocks – taking Germany’s Dax index 15% lower for 2019 to date – following the arrest in Canada for extradition to the United States of Meng Wanzhou, chief financial officer of tech giant Huawei Technologies Co, apparently over potential violations of US sanctions against Iran.
 
Oil prices snapped lower after Saudi Arabia’s energy minister said this week’s meeting of the Opec cartel and Russia won’t meet analyst expectations for a 1 million barrels per day cut to their combined 2019 output plans.
 
Platinum prices fell to $790 per ounce, nearly a 3-month low.
 
Silver prices also fell to show a 16% loss for the year-to-date, dropping to $14.36 per ounce.
 
Gold prices today held at $1236 per ounce, while the US Dollar rose near this week’s highest level against other currencies.
 
“November flows [into gold-backed exchange-traded fund products] were positive across all regions,” says the mining-industry’s World Gold Council in a new note, “marking the second consecutive month of net inflows [into gold ETFs as] global stock markets remained volatile.”
 
“Gold ETF holdings have become much more resilient in 2018,” said Suki Cooper of Standard Chartered at the gold market’s biennial LBMA seminar in London on Wednesday, noting how this summer’s drop in the gold price failed to spur heavy selling by investors, despite some 200 tonnes-worth of positions added since the start of 2017 then showing a loss.
 
The largest gold-backed ETF vehicle, the New York-listed SPDR Gold Trust (NYSEArca: GLD), has not changed in size so far this week after shrinking by 3.5 tonnes as investors sold on Monday.
 
Chart of SPDR Gold Trust (NYSEArca:GLD) backing in tonnes
 
“A balance between a host of factors such as [a widely expected] rate hike by the US Federal Reserve in December, uncertainty about trade tensions between Washington and Beijing, and a flattening yield curve has helped create a premium for the bullion,” says Benjamin Lu, a commodities analyst with Phillip Futures in Singapore. 
 
“The yield curve has sent a chill down investors’ spines in regard to the future outlook of the US economy,” agrees Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in New Jersey, also pointing to how the yield offered to investors by shorter-term US Treasury bonds is now near or above longer-term yields.
 
Inverting the more typical yield curve, where investors expect higher annual returns from longer-term bonds, this pattern has preceded each of the last five US recessions.
 
The spread between two-year and five-year Treasury yields inverted this week and the two-year and 10-year spread has shrunk to its flattest in more than a decade thanks to a sharp fall in long-term rates.
 
Chart of 10- minus 2-year US Treasury bond yields
 
Palladium meantime retreated from its new record high of $1263 per ounce but remained more valuable than gold for the first time since 2002.
 
“[Parity with gold] is fundamentally justified,” reckons Marcus Garvey, analyst at bullion-bank ICBC Standard. “The market has been in sustained deficit and the effects of that are being borne out.”
 
Here in London on Thursday, the UK Parliament continued to debate Prime Minister Theresa May’s proposed Brexit deal for leaving the European Union next March.
 
Having suggested this week that the UK could cancel Brexit without needing approval from the other 27 member states, the European Court of Justice will confirm its decision on the revocability of Article 50 on 10 December – 24 hours before the UK Parliament’s key vote on May’s deal.
 
Sterling gold prices held just below £970 per ounce Thursday, while gold priced in the Euro edged down from €1090.

Gold Prices 'Buoyed by Trade War', Yield Curve and Break with Yuan

GOLD PRICES held just below yesterday’s 5-week high in London Wednesday morning, trading near $1240 per ounce as Asian and European stock markets extended Wall Street’s steep drop amid forecasts of a US economic recession after the yield curve on Washington’s debt briefly inverted.
 
China’s politburo in Beijing meantime expressed “confidence” over reaching a new trade deal with the United States during the 90-day delay to new import tariffs agreed by presidents Xi and Trump at the G20 summit last weekend.
 
“China does not want Tariffs!” Trump tweeted overnight – also retweeting a comment that fuel-tax protesters in France are allegedly chanting “We want Trump” as part of a “middle class rebellion against cultural Marxism”, exemplified by the Paris climate accord.

….I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN

— Donald J. Trump (@realDonaldTrump) December 4, 2018

Monday saw 2-year US Treasury bond yields rise above 5-year yields, suggesting that the market sees interest-rate cuts ahead. But the more closely-watched 10-versus-2 year spread remains positive.
 
From this time last month, betting on the US Federal Reserve raising its key rate 3 times or more by end-2019 has now halved according to data from futures exchange the CME, falling from 59.1% of speculative positions to just 30.0% last night.
 
Having closely tracked the Chinese Yuan’s exchange-rate to the US Dollar all through 2018, gold prices have risen as the Yuan fell since October, extending that split so far in December.
 
The Yuan this morning rose to 14.64 US cents. Gold would today stand nearer $1200 per ounce if 2018’s correlation with the CNY hadn’t snapped.
 
Chart of Chinese Yuan in US Dollars (red right) vs. gold price. Source: St.Louis Fed
 
“Shanghai opened [Wednesday] with a mild bid-bias,” says the daily trading note from Swiss refiners and finance group MKS Pamp, “although further gains were tempered by firming USD…weighing upon gold
 
“It remains to be seen whether gold is able to sustain its recent bid tone, with much to be determined on the movement of US yields and concurrently the greenback. Resistance through $1240 remains formidable.”
 
“[The] US-China trade war is a source of market anxiety and, therefore, potential support for gold and silver prices,” says Australian bank Macquarie’s commodities team.
 
But forecasting a Q1 2019 average price beneath $1200, it says “buoyant US economic activity and the US Fed’s ongoing rate-hike cycle matter more to investors…dominant supports of the US Dollar.”
 
Euro gold prices meantime edged back above €1090 per ounce on Wednesday after reaching that 6-week high yesterday even as the European Commission said Italy’s left-right coalition “is now willing to listen to our point of view” about cutting its 2019 budget deficit plans.
 
Over in London Theresa May’s Government was defeated 3 times in the House of Commons on Tuesday, forcing it to publish private legal advice and to accept a greater role for Parliament in renegotiating Brexit should May’s deal be rejected by lawmakers in next week’s key vote.
 
Some pundits see that as opening the door to the UK cancelling Article 50 and remaining in the European Union – a move it could make unilaterally, without needing the other 27 EU states to agree, according to legal advice from the European Court of Justice.
 
The UK gold price in Pounds per ounce today retreated to £969 after hitting its highest since mid-June on Tuesday at £977.
 
Silver prices on Wednesday fell back to $14.48 after hitting 4-week highs above $14.60 per ounce.
 
Platinum meantime traded back below $800 while sister-metal palladium leapt yet again, spiking to $1260 per ounce and overtaking gold prices for the first time since 2003 according to Bloomberg.
 
“Looking ahead,” say specialist analysts Metals Focus, “we believe the dynamic of an investor long overhang that has been built up for palladium, combined with the [reversal of bearish speculative betting] in the gold market, will eventually contribute to gold re-establishing its premium over palladium.”

Gold Prices Jump to $1240, Palladium Near Parity as 'Risk Rally' Fades Amid Brexit Legal Rows, 'Yellow Vest' Victory

GOLD PRICES rose to $1240 per ounce in London trade Tuesday, challenging 4-month highs even as the US Dollar rose amid a retreat in ‘risk’ assets led by equities.
 
Silver rose to 4-week highs above $14.60 and palladium jumped to $1232 per ounce – a new record high in Dollar terms and nearing parity with gold for the first time since 2002.
 
Platinum prices failed to join the precious metals surge however, holding at $804 per ounce – a 10-year low when reached this July.
 
Gold priced in the Euro traded near 6-week highs as political tensions held firm in France and Spain, and UK gold prices meantime jumped to £973 – up 1.7% for this week so far – as Prime Minister Theresa May continued defending her proposed Brexit deal with the European Union amid a Parliamentary row over the legal advice given to her Government.
 
Gold priced in Sterling had earlier eased back as the Pound rallied on the FX market after the European Court of Justice’s most senior lawyer said the UK could, if it wished, revoke Article 50 before next March’s Brexit deadline and remain within the European Union on Britain’s current terms without needing approval from the other 27 member states.
 
Dropping again on Tuesday, London’s UK-focused FTSE250 stock index has now lost 11% in Sterling terms so far in 2018.
 
The more international FTSE100 index has dropped 8%.
 
UK gold price in Pounds per ounce. Source: BullionVault
 
Alongside platinum, yesterday’s rally in equity prices also failed to support so-called “crypto-currency” Bitcoin, which lost over 6% versus the Dollar only to regain that much early Tuesday.
 
“The risk-on vibe [has] inspired palladium bulls to continue to push the metal through $1200,” notes Swiss refining and finance group MKS Pamp.                       
 
“Tightness in this market continues to play a factor,” MKS goes on, pointing to wide trading spreads in palladium – which finds nearly 80% of its end-use in autocatalysts to reduce emissions from gasoline engines – plus high costs for booking physical delivery in early 2019.
 
As for gold prices, the metal “eased back slightly into [Monday’s] close…[but] managed to hold onto the [$1230] handle at the closing bell,” MKS’s trading team says – “a feat that hasn’t been achieved since late October and has proved a big hurdle over the past month.”
 
Euro gold prices today held near €1088 per ounce – the highest since late-October’s spike – as France’s prime minister Edouard Philippe today gave into demands from the so-called ‘galets jaunes’ protests which have now seen one person killed and hundreds injured in clashes with police.
 
After 2 weeks of marches, vandalism and violence from protesters wearing hi-vis yellow vests over the government’s new green tax-hike on fossil fuels, Philippe said the tax rise will be suspended from 6 months.
 
“We needed strong and visible measures. This is just a delay,” said one ‘gilets jaunes’ protestor.
 
“I doubt that the movement ends here.”
 
Meantime in Andalusia, and after conservative anti-immigration party Vox won 11% of the vote in last weekend’s local elections – claiming the first “far right” seats since the fascist Franco era – anti-Vox marches across the southern region last night saw protesters in Granada, Málaga and Seville declare “We are not afraid.”
 
Italy’s bond spread over comparable German yields retreated however, dropping near end-September levels at 280 basis points, as the left-right coalition of M5s and Lega politicians made further concessions to Brussels over its 2019 spending deficit plans.
 
Global stock markets reversed half of Monday’s rise, pulling the EuroStoxx 600 index over 7% lower from this time last year and putting China’s CSI300 more than 18% lower.

Silver Doubles Gold Price Jump After US-China Agree 90-Day Trade-War 'Ceasefire' at G20

GOLD PRICES jumped on Monday as the US Dollar retreated on news of a “ceasefire” in the US-China trade war, agreed at this weekend’s G20 summit of world leaders in Argentina, writes Atsuko Whitehouse at BullionVault.
 
World stock markets also jumped, as did commodities, with crude oil adding over 5%.
 
After last month’s historic slump in oil prices, Saudi Arabia and Russia this weekend extended their pact to manage supplies between them, and Canada’s largest producing province ordered unprecedented supply cuts.
 
Opec-member state Qatar said Monday it is leaving the cartel, now due to meet in Vienna in Friday to agree 2019 quotas.
 
Silver prices outpaced gold this morning to trade 2.2% higher at $14.50 per ounce.
 
Spot gold climbed almost 1% to $1232 per ounce, more than three-week high, while the US Dollar Index – a gauge of its value versus six major currencies – traded down 0.5%.
 
While the US currency is heading for its 5th annual gain of the last six years, gold priced in Dollars held a 5% loss for 2018-to-date on Monday morning.
 
Chart of US Dollar index vs. gold priced in USD, year-end. Source: St.Louis Fed
 
Meeting in Buenos Aires on Saturday, US President Donald Trump and China’s President Xi Jinping agreed to a 90-day delay in applying the latest rounds of their import tariffs on goods from each other’s countries.
 
“Even though it’s [just] a 90-day truce and both US and China still need to sort out multiple issues in this period,” says Mayank Mishra, global macro strategist at Standard Chartered, “from the markets’ perspective getting [this] outcome and de-escalation of tensions is clearly positive for risk sentiment.”
 
At the summit in Argentina’s capital, the G20 leaders also managed to agree a joint declaration that noted divisions over trade but for the first time did not criticise “protectionism”.
 
“The over pessimism in bullion space on account of interest rate moving up is overdone and this is the right time to accumulate gold,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, India, adding, “by December 31 we can see Comex gold [futures contracts] at $1250.”
 
Hedge funds and other money managers last week increased their bearish position in Comex gold futures and options by 19%, raising it to the notional equivalent of 161 tonnes in the week to Nov. 27, according to US regulator the CFTC.
 
The ‘Managed Money’ has now been net bearish for 20 weeks, by far the longest period since the CFTC started reporting in this format in June 2006.
 
Back from the G20 meeting, French President Emmanuel Macron has held an urgent security meeting following a day of riots by thousands of anti-government protesters.
 
Three people have been killed, more than 100 people were injured in the city, including 23 members of the security forces, and nearly 400 people were arrested, in the protests since demonstrations started more than two weeks ago, police said.
 
Gold prices for European investors rose to €1085 per ounce while Italian Prime Minister Giuseppe Conte signalled optimism that his government can reach an agreement with the European Commission over its 2019 budget deficit.
 
Also back from the G20 talks, Prime Minister Theresa May has just one week to convince dissenting members of Parliament to pass her ‘Brexit deal’ bill.
 
On Monday, the opposition Labour Party warned the UK faces a ‘constitutional crisis’ if May does not publish the full legal advice it has received on her Brexit deal.
 
Gold prices for UK investors climbed to £968 per ounce, the highest more than five weeks, as the British pound dipped 0.1%.