Author Archives: citygold

Gold Prices Hit 22-Month Euro High as Paris Prepares for 'Act 13', 'Deluded Left-Wingers' Back Maduro Over BoE Gold Request

GOLD PRICES again held $5 per ounce lower for this week so far in London on Friday, trading just below $1313 as the US Dollar edged higher once more on the currency market.
 
European stock markets fell for a second day, erasing the week’s earlier 1.9% on the EuroStoxx 600 index as Paris and other French cities prepared for ‘Act 13’ of so-called gilets jaunes protests and France’s worst diplomatic row with Italy since WW2 continued over “interference” from Rome’s finance minister.
 
Gold priced in the Euro set fresh 22-month highs above €1158 per ounce, gaining more than 14% from last September’s multi-month lows.
 
Chart of gold priced in Euros, last 5 years. Source: BullionVault
 
“Some of our growth indicators are clearly seeing easing global activity and trade volumes are being hit,” Reuters quotes economist John Sharma at National Australian Bank.
 
“That makes people cautious and could derive support for gold around $1300-1330 range.”
 
Betting on US interest rates now sees a 30% chance that the Federal Reserve will cut the cost of borrowing from today’s 2.5% level by this time next year.
 
This time last month, 20% of the betting said the Fed will raise rates by February 2020 – a likelihood now slashed to 1.4% according to data from the CME derivatives exchange.
 
As gold in Dollars headed for its first weekly drop in three on Friday, record-high retail gold prices in No.2 consumer nation India look set to boost household selling of jewelry, says the India Bullion and Jewellers Association (IBJA), with scrap flows for the first 3 months of 2019 likely to reach 25 tonnes – some 75% greater than the same period last year.
 
Back here in London, around 100 protesters yesterday demanded that the Bank of England release the 31 tonnes of gold it apparently holds in custody for Venezuela to the government of Nicolas Maduro – a move that would defy both US sanctions and a request from the Latin American state’s widely-recognized interim president Juan Guaido.
 
“There’s undoubtedly a crisis in Venezuela at the moment,” admitted UK Labour Party politician Chris Williamson, “but that’s not going to be helped by seizing the nation’s assets in this way.”
 
“Before going ahead with any transaction,” the Bank of England tells the AFP news agency, “[we must] be satisfied that the counterparty has the authorisations necessary to request the transaction, that all relevant sanctions are complied with, and that there is no evidence that the transaction will involve relevant criminal activity.”
 
Besides Williamson, the protesters – called “deluded left-wingers” by the Conservative MP who last month asked the Bank of England to continue refusing the Maduro government’s requests – included former Labour MP Ken Livingstone.
 
As Mayor of London he swapped advice on transport and tourism for a 20% discount on fuel from Venezuela for the UK capital’s bus fleet from Maduro’s predecessor Hugo Chavez. In 2017 he reportedly said that Venezuela’s descent into chaos was because “when Chavez came to power, he didn’t kill all the oligarchs.”

Gold Price at 22-Month EUR Highs as France Recalls Ambassador to Italy

GOLD PRICES recovered a $5 drop in London trade Thursday as the US Dollar eased back from this week’s gains on the currency market following a surprise rise in the number of Americans filing for jobless benefit claims.
 
The Euro gold price in contrast held firm near the highest since April 2017 at €1155 per ounce as France recalled its ambassador to Rome over what Paris called “outrageous statements” from Italy’s deputy prime-minister Luigi Di Maio, “exploiting relations for electoral purposes.”
 
Leader of Italy’s self-declared ‘anti-establishment’ M5S party – now in coalition with the right-wing Lega – “The winds of change have crossed the Alps,” tweeted Di Maio after meeting self-appointed leaders of the gilets jaunes protesters, now planning to stand in May’s European elections.

Oggi con @ale_dibattista abbiamo fatto un salto in Francia e abbiamo incontrato il leader dei gilet gialli Cristophe Chalençon e i candidati alle elezioni europee della lista RIC di Ingrid Levavasseur.
Il vento del cambiamento ha valicato le Alpi. pic.twitter.com/G8E0ypLalX

— Luigi Di Maio (@luigidimaio) February 5, 2019

Having spiked to the highest since September 2017 in late January, new US claims for jobless income support last week came in only 7.5% lower, barely half the drop Wall Street analysts forecast.
 
Priced in the Dollar, gold prices had briefly dipped below $1303 per ounce for the first time in a week in Asian trade, where financial markets in China – the world’s No.1 gold consumer market – remain shut for the Lunar New Year until Monday.
 
The UK gold price in Pounds per ounce meantime rose to £1015 – a 16-month high when first reached at the start of January – as the Bank of England cut its UK GDP forecast to the slowest growth since the global economic slump of 2009.
 
As the Dollar weakened in 2016 and again in 2017, gold prices traded higher for US investors than for non-US investors, but the metal has been stronger against non-Dollar currencies since the start of 2018.
 
Chart of gold outside the Dollar (blue) and in USD terms (red), rebased to Donald Trump's Jan 2017 inauguration. Source: St.Louis Fed
 
“Global slowdown concerns saw the Dollar gaining and gold moving down,” Reuters quotes one spread-betting analyst.
 
But while gold prices are “pressured by a stronger Dollar,” says the Wall Street Journal, they “remain near their highest levels since June” in USD terms.
 
The Reserve Bank of Australia yesterday held its key interest rate at a record low of 1.5% and warned that GDP growth looks “weaker than expected…due to slow growth in household consumption and income.”
 
Keeping UK interest rates near all-time lows and maintaining £435bn of QE bond purchases, the Bank of England today cut its 2019 UK GDP forecast from 1.7% to 1.2%, pointing to a drop in business investment, in new home-building, and in export growth.
 
UK Prime Minister Theresa May meantime had “robust but constructive” talks on Brexit – set to take effect on 29 March – with European Commission President Jean-Claude Juncker in Brussels today.
 
Further talks are now due for end-February, while UK and European Union negotiators seek “a way through” on the Irish backstop.

India Gold Prices Hit Record High, 'Demand Good', Smuggling Jumps

GOLD PRICES held flat in US Dollar terms in London on Wednesday, keeping a $5 drop for the week so far but rising towards new all-time highs for households in world No.2 consumer market India.
 
Euro gold and the UK gold price in Pounds per ounce both rose, hitting 22-month highs above €1155 and 3-week highs at £1017 respectively as politicians from the European Union and the UK got no nearer to resolving the ‘Irish backstop’ part of their Brexit deal rejected by lawmakers in London last week.

I’ve been wondering what that special place in hell looks like, for those who promoted #Brexit, without even a sketch of a plan how to carry it out safely.

— Donald Tusk (@eucopresident) February 6, 2019

Gold priced in Dollars meantime held around $1313 as world stock markets slipped after US President Trump’s annual State of the Union address called for an end to what he called “the politics of revenge” but failed to highlight any progress in the key US-China trade talks.
 
“Relatively muted price action again for bullion during Asian trade today,” says one trading desk, noting the absence of No.1 consumer market China thanks to this week’s Lunar New Year holidays.
 
Over in India however – the metal’s second largest consumer market – retail gold prices today reached above 33,000 Rupees per 10 grams in Mumbai and over Rs 34,000 in Ahmedabad, nearing new all-time record highs.
 
Coming after wholesale gold prices in India last week rose to a slight premium to global quotes, these levels match the record-high Rupee cost for consumers of August 2013, when India’s then-Congress Party government rushed out a series of severe anti-gold import rules to try and stem the country’s huge balance of payments deficit, worsened by record-high gold demand amid the metal’s steepest Dollar-price drop in three decades.
 
India today continues to charge 10% import duty on gold bullion, plus extra VAT sales tax on jewelry since 2017.
 
Wholesale prices in the sub-continent have now traded at a discount to London on 75% of all business days over the last 3 years according to data compiled by the mining-industry backed World Gold Council, suggesting weak domestic demand against plentiful supply.
 
https://www.bullionvault.com/gold-news/sites/default/files/india-premium-6-feb-19.png Chart of India gold price premium/discount to London quotes. Source: World Gold Council
 
“Despite high prices, demand for gold jewelry has been good, mainly due to the ongoing wedding season,” the Times of India quotes one retailer.
 
“We expect purchase to remain good for another month, before the Holashtak or inauspicious period sets in.”
 
Late-2018’s rising gold price for India consumers “saw a rise in the number preferring to exchange existing gold for new pieces” said the WGC of India’s jewelry business in its global demand update last week.
 
“This was particularly prevalent in the south and west regions, where some retailers reported an increase of up to 45% in [this type of] exchange activity.”
 
India’s police and Customs officials meantime report “an extra push from smugglers to bring in more quantity of gold,” reports the New Indian Express, with gangs looking to exploit today’s near-record high retail prices for legally-imported and retailed products.
 
“When smugglers used to bring less than a kilo of gold before,” says Customs Commissioner Sumit Kumar, “they now take additional risk and smuggle in more quantities.”
 
Following last week’s pre-election giveaways in India’s national 2019 budget – widely expected to boost gold demand in the key rural states – the finance minister of Assam today promised a raft of subsidies and gifts for the northeastern state’s citizens, including free electric bicycles for each student passing this year’s senior school exams, rice priced at just 1 Rupee per kilo for 5.3 million families, and 1 tola of gold (currently worth around $500) for brides whose families earn less than $7,000 per year.
 
Formerly a politician for the Congress Party – dominant in Indian politics until Narendra Modi’s victory in 2015 – Himanta Biswa Sarma quit to run on the ticket of today’s ruling BJP in May 2016.

Gold Price Flat, GLD Shrinks as Chinese Traders Clock Off for Lunar New Year

GOLD PRICES held $5 lower for the week so far on Tuesday morning in London, trading at $1313 per ounce as world stock markets rose at the start of the Chinese New Year of the Pig.
 
Shares in Australia’s banking sector jumped after the Reserve Bank kept its key interest rate on hold at a record low of 1.5%.
 
Among gold-backed ETF products, the giant SPDR Gold Trust (NYSEArca: GLD) ended last night with its fastest 2-session outflow since early September, shrinking 1.3% from Thursday’s finish as gold prices shed 0.8% from that new 8-month high of $1323 per ounce.
 
While the gold price in Dollars has risen 10.5% since early October’s low, the GLD has expanded by 11.4%.
 
Chart of SPDR Gold Trust (NYSEArca: GLD) bullion backing. Source: ExchangeTradedGold
 
“With Chinese investors [on Monday] enjoying their first day of the lunar New Year holiday,” says today’s trading note from Swiss refiners and finance group MKS Pamp’s Asian desk, “volumes through both spot and Comex were noticeably light.
 
“Spec[ulative] traders who are happy to trim longs with China out for the next week.”
 
Despite the loss of wholesale demand from the world’s No.1 gold consumer nation however, gold prices have tended to perform well during China’s week-long Lunar New Year holidays.
 
Compared with gold’s average 5-session change across the last 10 years of 0.1%, the week starting Chinese New Year’s Eve has on average seen a 1.8% gain for gold priced in US Dollar terms, ranging between a 1.8% drop (2018) to a 5.0% rise (2016).
 
Eleven mints and refiners worldwide are today launching commemorative Chinese New Year of the Pig coins, reports the South China Morning Post, including the Central Bank of Taiwan – which began its zodiac series in 1993 – and Australia’s Perth Mint, which started its series in 1996.
 
“Despite escalating trade tensions between Beijing and Washington,” says the SCMP, “even the US Bureau of Engraving and Printing is getting in on the act…offering ‘Lucky Money’ red packs featuring an uncirculated US Dollar with ‘8888’ in its serial number.”
 
Forecasting a weaker US Dollar ahead, “The slowing…of the US economy, combined with Fed chair Jay Powell’s comments that he remains ‘patient’ have radically swung 2019 market pricing for the Fed Funds rate towards rate cuts,” says a note from analysts at Commonwealth Bank of Australia.
 
But in gold, “investors will need to get more signals before getting more aggressive,” reckons Canadian brokerage TD Securities, because “despite the fact that the Fed has gone dovish, they could still hike one more time.”
 
“In my view,” says Loretta Mester, head of the Cleveland Fed and also a non-voting member like Kashkari until 2020, “monetary policy does not appear to be far behind or far ahead of the curve…The fed funds rate may need to move a bit higher than current levels.”
 
The UK gold price in Pounds per ounce meantime touched £1010 for the first time since Friday lunchtime as Sterling hit 2-week lows on the FX market.
 
Prime Minister Theresa May today met with politicians and business leaders in Northern Ireland to defend the “Irish backstop” part of her Brexit deal with the European Union, due to take effect 29 March but still lacking Parliamentary approval.
 
Euro gold prices today held in line with last week’s finish at €1150, the highest Friday close for single-currency bullion traders since April 2017.

Gold Price Drops $15 from 8-Month High, Crude Oil Gains as US-Russia Tensions Worsen Over Venezuela, Arms

GOLD PRICES slid Monday in London, losing more than $15 per ounce from Friday’s new 8-month high for US Dollar investors as No. 1 consumer nation China shut for the Lunar New Year holidays.
 
World stock markets meantime ticked lower and oil prices hit 2-month highs amid the worsening crisis in the energy resource’s No.1 reserves holder Venezuela, plus growing US-Russia tensions.
 
Gold bullion prices fell to $1310 per ounce as the US Dollar bounced on the currency market following 2 consecutive weeks of declines.
 
“[Friday’s] upbeat non-farm payroll suggests the US economy is riding a strong momentum, dampening demand for safe-haven assets like gold,” Reuters quotes one spread-betting brokerage.
 
Ending last week with the Federal Reserve holding its key interest rate unchanged, January however saw gold-backed ETFs increase their holding “by over 70 tonnes,” notes German bank Commerzbank.
 
“That is almost equivalent to the total inflows of last year.”
 
Due to the New Year’s partial US government shutdown, US regulator the CFTC remains behind with updates to positioning data in precious metals futures and options contracts.
 
But new figures released Friday confirmed that hedge funds and other speculators in the Managed Money category grew their bullish betting on gold prices as 2018 ended, capping their longest run on record of bearish bets.
 
US benchmark WTI-grade oil contracts meantime rose above $64 a barrel on Monday as supply cuts from the Opec cartel of nations, plus new US sanctions against Venezuela’s petroleum industry, spurred talk of a supply crunch.
 
Chart of gold vs. US crude oil prices. Source: St.Louis Fed
 
The US State Department’s move to block the sale of Venezuelan crude aims to force President Nicolas Maduro to hand power to rival Juan Guaidó – now recognized as interim leader of the Latin American nation by Washington plus Australia, the UK, Spain, France and Germany.
 
Following mass protests against Maduro at the weekend, US President Donald Trump said Sunday that US military action is “an option”.
 
Venezuela’s ally Russia warned the US against “destructive meddling”.
 
With the Bank of England refusing to ship Venezuela’s gold bullion holdings in London back to Caracas since November, Abu Dhabi investment firm Noor Capital on Friday confirmed accusations from Florida senator Marco Rubio that it bought 3 tonnes of gold from Venezuela’s central bank on 21 January, adding that it will now hold off buying more amid the US-led sanctions.
 
The BBC meantime quotes “a senior Western diplomatic source” that Turkey has been “warned” against accepting any more gold from Venezuela – most especially with “growing suspicions” that it is then busting other sanctions to re-export the metal to Iran – after importing nearly $900m-worth last year.
 
After the United States said on Friday it will withdraw from a 1987 arms controls pact with Russia in 6 months’ time unless Moscow ends what Washington says are violations, President Vladimir Putin suspended the Intermediate-range Nuclear Forces Treaty with immediate effect on Saturday.
 
Silver prices today fell harder than gold, retreating 3.0% from Friday’s top above $16 before rallying 10 cents to $15.82 per ounce.

BJP's Pre-Election Giveaways and Tax Cuts 'Will Boost India Gold Demand' as USD Price Holds 8-Month High

GOLD PRICES held 1.3% higher for the week in Dollar terms  late Friday in London, trading near 8-month highs at $1322 per ounce despite much stronger-than-expected US jobs data.
 
Rural households in India – source of 60% of annual gold demand in the metal’s No.2 consumer country – meantime got news of huge income support and tax cuts from the BJP Government, now 2 months away from national elections.
 
With the Federal Reserve this week vowing to stay “patient” before raising Dollar interest rates, US employment rose by 304,000 in January, today’s data said, beating Wall Street’s average forecast by nearly 85%.
 
Gold prices in Shanghai earlier rose within 1 Yuan of early January’s two-year highs at ¥287 per gram, but their premium above London gold bullion quotes slipped below $10 per ounce in Dollar terms, trimming the incentive for new bullion imports into the metal’s No.1 consumer nation as the Chinese New Year holiday season began.
 
Wholesale prices in India meantime held a $2 discount to London, suggesting a small glut of supply as import duty and sales tax – plus this week’s Dollar price – pushed domestic Rupee prices up near all-time highs for consumers.
 
New Delhi’s 2019 Government Budget – delivered today by finance minister Piyush Goyal – failed yet again to cut gold’s 10% import duty as dealers had hoped.
 
But tax relief for small farmers and middle-class earners “will be good for increasing jewelry demand,” says Anantha Padmanabhan, chairman of the All India Gem & Jewellery Domestic Council. 
 
Formerly world No.1 but overtaken by China since 2013, India’s household gold demand slipped 1.5% last year from 2017’s small recovery according to this week’s global demand data from the mining-backed World Gold Council, but remained almost 100 tonnes above 2016’s multi-decade low of 670 tonnes.
Chart of India's household gold demand. Source: BullionVault via World Gold Council
 
Standing in for Arun Jaitley – now in the US for medical treatment – Goyal didn’t refer once to gold in today’s speech to Parliament, but his supporting documents online repeat plans to develop and launch a “comprehensive Gold Policy to develop gold as an asset class” formally announced in last year’s Budget.
 
Goyal instead unveiled a $10.5bn program of farm-income support for small landowners, and erased income tax for wages below $7,000 with further tax cuts targeting a total of 30 million middle class workers and small-business owners.
 
Announced alongside India’s worst jobless rate in 45 years, this heavy spending by Narendra Modi’s BJP Government will widen New Delhi’s fiscal deficit to 3.4% of GDP.
 
Today’s high prices and high tax rates on gold mean smuggling volumes could rise by another one-half in 2019 reckons Haresh Acharya at the India Bullion & Jewellers Association, claiming that wholesale traders are asking 1.5% less per kilo for cash rather than check payment, to avoid a paper trail.
 
“Innovative” smuggling tricks discovered by India customs officials include a new “rubbery form” where gold is mixed into an elastic compound and then hidden in shoes “or even tucked into underwear” says The Times of India today.
 
“[Gold sales are] slow despite the wedding season,” says Acharya at he IBJA.
 
“Everybody is waiting for gold prices to cool off, which does not seem likely to happen in the near future.”

Central Banks Buying Rescue Gold from Weakest Demand Since 2009

CENTRAL BANKS choosing to buy gold in 2018 saved the metal from its worst year for global demand since the economic crash of 2009, new data showed Thursday.
 
Gold prices meantime extended their New Year 2019 surge after the US Federal Reserve held its key interest rate unchanged.
 
Promising to remain “patient” on further hikes, Fed chairman Jerome Powell also said the US central bank may stop reducing its balancesheet – swollen four-fold to $4 trillion by ‘quantitative easing’ following the global financial crisis of a decade ago – sooner than previously expected.
 
Dollar prices to buy gold in London’s wholesale market – centre of the world’s bullion trade – hit new 8-month highs at $1324 this morning.
 
But gold prices rose faster for Eurozone investors, reaching the highest since April 2017 above €1150 per ounce.
 
Without last year’s 73% rise in central-bank gold buying, total global demand for the metal would have barely reached 4,000 tonnes in 2018 according to Thursday’s new data, presented by the mining industry-backed World Gold Council.
 
European Union members Poland and Hungary shocked analysts in 2018 by joining Central and East Asian central banks in buying gold.
Chart of global gold demand, World Gold Council presentation of Metals Focus research
 
As a group, demand to buy gold by central banks totaled over 651 tonnes in 2018 on the new figures, compiled for the World Gold Council by specialist analysts Metals Focus. 
 
The second highest yearly total on record according to today’s release, that offset a drop in demand to buy gold-backed ETF trust fund products among money managers and other investors, and rescued full-year demand from what would have been the lowest total in a decade.
 
Demand for fabricated products from households and industry rose 1.3% from 2017 to rally further from  the weakness of 2016.
 
But buying gold as jewelry, for electrical, technological or dental use, plus retail investment in gold coins  and bars, still came in 3.8% below their combined 10-year average.
 
“Economic uncertainty, slowdown [and the] US-China trade conflict supported investment flows” in late 2018, Reuters quotes the World Gold Council’s head of market intelligence, Alistair Hewitt.
 
“The flip side is that it hit some elements of the market,” with Middle Eastern suffering from lower household confidence plus a rise in domestic gold prices thanks to weaker local currencies.
 
“This dynamic is likely to run through 2019,” the WGC’s Hewitt adds.
 
European stock markets meantime struggled on Thursday despite Asia following the US sharply higher overnight following the Fed decision.
 
Silver prices jumped 2.4% for the week, breaking above $16 per ounce for the first time since July.
 
Platinum prices were more muted, recovering early January’s levels around $825 as sister metal palladium recovered half of the last fortnight’s 8.8% plunge from new all-time highs near $1440 per ounce.

Gold Investment and China Demand Send Price Up to 8-Month High Ahead of the Fed

GOLD INVESTMENT prices hit 8-month highs at the start of London trade Wednesday, reaching almost $1316 per ounce in US Dollar terms as world stock markets held flat overall ahead of today’s Federal Reserve interest-rate and policy announcement.
 
London’s FTSE100 index of mostly foreign-earning corporations rose most steeply, adding 1.4% as the UK’s Prime Minister Theresa May tried to re-open Brexit negotiations with the European Union after Parliamentary voted again last night to reject the ‘Irish backstop’ agreed with the EU for preventing a hard border on the island of Ireland after Britain’s 29th March exit from the world’s largest economic bloc.
 
While the Fed is expected to leave US interest rates on hold, Shanghai gold prices rose overnight almost as steeply as Dollar quotes for investment-grade bullion.
 
With the key Chinese New Year festival now less than one week away, that kept the incentive for new gold imports into the No.1 consumer nation above $13 per ounce.
 
Gold investment demand among private US citizens is “off to a strong start” in 2019, says the latest weekly note from specialist consultancy Metals Focus, pointing to solid New Year sales of American gold Eagle coins.
 
“This owes much to the impact of increased volatility in US stock markets and the strong performance of precious metals prices.”
 
US money managers also show growing interest in tracking gold prices, with the largest gold-backed ETF trust fund – the SPDR Gold Trust (NYSEArca: GLD) – expanding to its largest size since June by last night’s close.
 
Chart of GLD size in gold-backing vs bullion price. Source: BullionVault via ExchangeTradedGold
 
We remain positive on gold,” says London bullion bank HSBC’s chief precious metals analyst James Steel, because “financial market volatility is up compared to last year.
 
“If you see equity, financial market volatility, indicating a degree of investor uncertainty, that would explain why gold has become more popular in the last couple of months.”
 
“Whilst markets have factored in some of the downside risks of Brexit and US-China trade wars,” says the London Bullion Market Association – today presenting its 2019 gold-price forecast survey of professional analysts – “other factors such the level of US real interest rates, strength/weakness of the Dollar, the likely impact of geopolitical factors and the pace of global economic growth continue to provide uncertainty.”
 
“Gold rallies are more likely to be sustained if investor demand is resilient and broad-based,” says the new Q4 2018 data and analysis from Refinitiv – formerly the data and risk division of global news agency Thomson Reuters.
 
“[But] while ETF and bar and coin demand is expected to see a return to growth, physical markets are likely to be subdued due to the higher price level.”
 
With Chinese Yuan gold prices today reaching their highest since April 2017, prices for consumers in No.2 demand nation India today neared fresh all-time record highs according to the Economic Times, with import duty and the 3% GST sales tax taking the price of 99.5% fine jewelry up to 33,815 Rupees per 10 grams in Mumbai’s Zaveri Bazaar.
 
Back in London’s wholesale bullion market, silver meantime tracked gold prices higher and then lower ahead of the US Fed interest-rate decision on Wednesday, peaking within 2 cents of $16 per ounce – the highest Dollar price since July.
 
Platinum prices struggled in contrast, slipping back below last week’s closing level at $818 per ounce.
 
Silver prices are, on today’s average LBMA forecast, expected to show a 3.6% rise across 2019 – hitting a peak sometime this year at $17.99 – while platinum prices will fall nearly $30 to average $851 per ounce.
 
Already slipping 3.1% so far this New Year from 2018’s record-high annual average of $1029, palladium is seen rising by almost one-quarter across 2019 on average, extending its surge on a global deficit of supply to meet demand.
 
“[But] as the trade war drags on,” cautions French investment bank Natixis’ Bernard Dahdah – the most bearish palladium forecaster for 2019 with a view of just $900 per ounce – “we expect weaker economic growth and [auto] sales in both the US and China.
 
“The biggest risk to prices [will come] from Russian state reserve sales.”
 
Widely expected to bring no change to Dollar interest rates, today’s US Fed decision comes as UK Prime Minister Theresa May prepares to head back to Brussels in a bid to renegotiate the ‘Irish backstop’ element of the UK’s withdrawal agreement with the European Union, rejected in favor of unnamed “alternative arrangements” by a narrow majority of UK lawmakers on Tuesday despite the EU repeatedly saying it will not re-open talks.
 
“Confronted with an increasingly irritated public…watching with mounting despair…more than a few MPs are worried about the prospect of deselection,” says long-time Brexit advocate and blogger Richard North.
 
With just 58 days until the legally set 29 March deadline, “There will still be a few delusional MPs who believe that the EU will cave in,” North goes on, “but my guess is that the majority are beginning to see the writing on the wall.”

China Demand 'Buoyant' Even as Gold Prices Top $1310, UK Brexit Plans 'Both Funny and Tragic'

GOLD PRICES in the London wholesale market touched an 8-month high at $1310 per ounce Tuesday as European stock markets rallied and crude oil rose.
 
Gold priced in the so-called ‘safe haven’ Swiss Franc gold also rose to its highest since May 2018, gaining above CHF1300 per ounce, while gold prices for Eurozone investors set fresh 19-month highs above €1146.
 
The UK gold price in Pounds per ounce held little changed however below £995 as Sterling extended its rally ahead of today’s key Parliamentary vote on Prime Minister Theresa May’s agreement with the European Union for 29 March’s Brexit.
 
With 1 week to go until Chinese New Year – now the world’s peak gold buying festival, overtaking Diwali in India – gold prices in Shanghai’s wholesale market rose within 1.0% of early January’s spike to late-2016 levels against the Yuan.
 
Chart of Shanghai Gold Exchange benchmark prices in Yuan per gram. Source: SGE
 
Latest data said Monday that gold imports via Hong Kong to mainland China fell in half between November and last month, totalling just 19 tonnes in December.
 
But today the premium for gold delivered in Shanghai rather than global hub London rose to $14 per ounce. Some $5 above the typical incentive for new bullion imports into the No.1 consumer nation, that suggests solid demand.
 
“After withstanding a test underneath $1300 in New York on Monday,” says a trading note from Swiss refiners and finance group MKS Pamp, “bullion price action remained buoyant during Asian trade today.
 
“Today we see Comex expiry [of the January gold futures contract] with around 5,500 lots of open interest at $1300, which is likely to keep price action around the figure.
 
“The upcoming [US Fed] meeting should temper the breadth of the price range leading into Wednesday’s scheduled press conference.”
 
Betting on US interest-rate futures now puts a 100% chance on the Federal Reserve holdings its key rate unchanged this week.
 
Despite the partial shutdown of US government services ending last weekend, Wednesday’s GDP report for 2018 will still be delayed as the Commerce Department’s Bureau of Economic Analysis gets back to work.
 
Friday’s monthly jobs data from the Bureau for Labor Statistics will appear as usual.
 
Back in London, and among other amendments to May’s Brexit plan, lawmakers will vote on 2 key proposals – one calling for “alternative arrangements” to the contentious “Irish backstop”, and another calling for the Government to delay leaving the EU if no deal is approved by 26 February.
 
A third proposal aiming to unite the ‘hard Brexit’ and ‘Remainer’ wings of May’s party – calling for a free-trade agreement using “as-yet-unknown technology” – was called “both extraordinarily funny and tragic” by EU officials and a “fantasy” by pro-Brexit Conservative newspaper The Telegraph.
 
Shares in Russian aluminum producer Rusal (HKG: 0486) meantime extended their near-10% rally overnight, now erasing half of last April’s 70% plunge as the US Treasury lifted sanctions against tycoon Oleg Deripaska despite Democrat lawmakers pushing to maintain them.
 
That saw base metals venue the London Metal Exchange (LME) lift a temporary suspension on storing and trading Rusal-made bars.
 
Washington meantime applied new sanctions to Venezuela’s state-owned PDVSA oil company as part of its push against elected socialist president Nicolas Maduro – already blocked from repatriating gold bullion held for the Latin American nation at the Bank of England in London.

Gold Price Slips from Spike to $1300 Ahead of 'Dovish' Fed

GOLD PRICES held firm on Monday near last week’s spike to 7-month high above $1300 as investors and traders await the US Federal Reserve’s key policy announcement, due Wednesday.
 
The US Dollar rallied on the FX market after hitting 1-week lows on Friday’s report from the Wall Street Journal that the Fed may pause its sales of Treasury bonds, also known as ‘quantitative tightening’.
 
“We think the Fed may sound more dovish and be more aligned with the market expectation of limited room for rate increases this year,” reckons Tai Hui, chief market strategist for Asia Pacific at US investment bank J.P.Morgan’s asset management division.
 
“We will also look for hints of any change in the Fed’s strategy to reduce its balance sheet, even though economic momentum is still robust enough for the Fed to hold on for now.”
 
The Fed’s December forecast said it expected to make 2 or more hikes to interest rates in 2019.
 
Betting on the futures market however sees just a 3.0% of that happening, but the probability of 1 hike has doubled to almost 1-in-4 from the market’s expectations this time last month.
 
Chart of current betting on US Fed interest rates after December 2019 decision. Source: CME FedWatch
 
After signing temporary legislation to end the longest-ever shutdown of US government services, US President Donald Trump then threatened on Sunday that another government shutdown is “certainly an option”.
 
Credit rating agency Standard & Poor’s reckons that the five-week partial shutdown cost the US economy at least $6bn – more than the $5.7bn Donald Trump was demanding for his border wall.
 
European stock market meantime declined Monday, extending a retreat for Asian stocks, as investors waited for a new round of high-level US-China trade talks this week.
 
Gold for European investors edged down to €1140 per ounce, just shy of Friday’s new new 17-month high.
 
Eurozone GDP data for the end of 2018 are due out Thursday.
 
Here in London, UK lawmakers will tomorrow vote on Prime Minister Theresa May’s “plan B” for Brexit – effectively the same withdrawal agreement rejected earlier this month by the heaviest-ever Parliamentary defeat of a sitting Government.
 
With the Government leaking news it’s preparing to impose martial law if 29 March brings a ‘hard’ no-deal exit from the European Union, so-called Brexiteer politicians now say they’d back May’s plan if the Irish backstop is amended. But Ireland’s deputy prime minister Simon Coveney said Sunday that the provisions to ensure no hard border between Northern Ireland and the Republic “[are] not going to change.”
 
UK gold prices in Pounds per ounce held steady at £989 on Monday as Sterling edged back from 3-month highs on the FX market, down 4% from the 16-month high of £1032 reached at the very beginning of this month.