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Gold Prices Fall After Diwali as Trump's Tax-Cut Plans Boost Dollar

GOLD PRICES failed to hold yesterday’s rally on Friday in Asian and London trade, heading for the 5th weekly loss in 6 as world stock markets rose and India’s key gold-buying festival season of Diwali ended.
Major government bond prices fell, pushing 10-year US Treasury yields up towards early October’s 3-month highs at 2.36% after the Senate voted yesterday to approve President Trump’s push for major tax cuts.
The US Dollar rose once more, holding the Euro near $1.18 and edging gold down to $1282 per ounce.
Wholesale gold prices in India – the No.2 consumer nation behind China – fell in Rupee terms but attracted only “some token buying by jewellers” as Diwali has now finished.
Retailers are widely reporting a 30% drop in jewelry sales compared to typical autumn festive levels, but “overall…demand was down around 15%” nationwide, reckons Nitin Khandelwal, chairman of the All Indian Gems & Jewellery Trade Federation.
Asian and European stock markets rose Friday after Wall Street ended last night at yet more fresh all-time highs, adding over 27% to the Dow Jones Industrial Index for 2017 to date.
Shareholdings in the giant gold-backed SPDR Gold Trust (NYSEArca:GLD) ended Thursday unchanged for the 4th day running, needing some 853 tonnes of bullion to support its value.
Chart of SPDR Gold Trust holdings vs. bullion price. Source: BullionVault via ExchangeTradedGold
“The Dollar is up on account of the Senate vote,” reckons brokerage INTL FCStone’s Edward Meir, quoted by Reuters.
“That in turn could pave the way for introducing a tax reform bill…seen as a cause for higher [Fed] rates.” 
This week’s drop in gold prices – now 1.7% below Monday’s brief 3-week high – “implies a test of the current October low and the 200-day moving average [around] $1260,” says the latest Bullion Weekly Technicals from Germany’s Commerzbank.
“Below the 2017 uptrend [now at] $1243 we would allow for further slippage. [But] our longer term bias remains bullish.”
Carnegie Endowment associate Michael Swaine was quick to retract and apologize for a tweet on Thursday saying that Trump had authorized a “limited strike” against North Korea over its nuclear missile tests.
“Gold is an easy story to sell [on such news],” says James Calder, research director at City Asset Management in London.
“However, while it will be a huge tail risk event, the probability remains low and we have not been changing our portfolios on the basis of it.”
“Ongoing Fed balance sheet tapering does give something for gold prices to point south into the year-end,” says commodities economist Barnabas Gan at Singapore’s OCBC Bank, pointing to near-term support for prices at $1280 per ounce.
Back in India, the government yesterday added new curbs on gold imports by so-called “star trading houses”, requiring proof of domestic use for new shipments in a bid to block value-added sales tax scams known as “round tripping” estimated at 120-130 tonnes every year.
Despite India’s official ban on gold bullion exports, gross inflows of 648 tonnes last year contrasted with net inflows of 558 tonnes on data compiled for the mining-backed World Gold Council.

Gold Price Rallies as China Fears 'Minsky Moment' 30 Years After Black Monday, Spain and India Add to Tensions

GOLD PRICE losses of 2.0% for the week so far were cut to 1.2% lunchtime Thursday in London, as world equities fell from new record highs and government bond yields rose against a backdrop of fresh geopolitical tensions from Spain to India and China.
After Wall Street set new all-time highs last night, gold priced against the rising US Dollar touched $1288 per ounce as Western stock markets marked the 30th anniversary of October 1987’s Black Monday – the sharpest ever 1-day fall in equities – by falling some 0.7% on average.
Commodities slipped and major government bond prices rose, nudging longer-term interest rates lower.
The weakest UK retail sales data in 4 years meantime saw the Pound retreat to a 1-week low on the foreign exchange market, helping the UK gold price in Pounds per ounce to halve this week’s earlier 1.5% loss to trade at £976.
“From being the most hated developed market currency earlier this year,” says a Hedge Fund Watch from French investment bank Societe Generale, “Sterling is now back in favour” with speculators.
“March 2017 marked [the Pound’s] lowest level since 1988 and the sharp swing in net [speculative] positioning since then is a neat illustration of continued high volatility in the FX markets while volatility in almost all other asset classes is exceptionally low.”
Ticking higher on Wednesday’s new all-time record highs in US equities, the Vix volatility index ended at 10.3 from last week’s fresh record 9.2 lows.
Measured since 1990, the Vix peaked at an annual average of 32.7 amid the 2008 financial crisis.
Its previous annual lows came beneath 13 in the mid-1990s and mid-2000s.
So far in 2017, the Vix has averaged 11.8 year-to-date.
Chart of gold prices vs. the Vix volatility index for US stocks. Source: St.Louis Fed
Spain’s prime minister Mariano Rajoy today told Catalonia’s leader Carles Puigdemont that he will invoke Article 155 and take back all regional powers on Saturday unless the Barcelona parliament confirms it’s not seeking independence.
Puigdemont responding by saying Madrid is only pushing Catalonia closer to declaring independence.
Chinese and Hong Kong equities had earlier fallen on Thursday after People’s Bank governor Zhou Xiaochuan stressed a “focus on preventing” too much debt and leverage creating a ‘Minsky Moment’ of panic and tumbling asset prices.
“China, while rising alongside India, has done so less responsibly, at times undermining the international, rules-based order,” said US Secretary of State and former Exxon oil chief Rex Tillerson Wednesday, contrasting the way that China’s regional competitor India “share[s] an affinity for democracy [and] a vision of the future” with the United States.
“We will firmly uphold multilateralism,” countered a spokesman for China’s foreign ministry, “but we will also firmly safeguard our own rights and interests.”
Seventy years after partition from Muslim states Pakistan and Bangladesh, India’s prime minister Narendra Modi meantime celebrated the key Hindu festival of Diwali today with troops in the disputed territory of Kashmir.
With traditional gold dealers reporting Diwali jewelry sales down 60% from the average, some online retailers say sales have doubled but with heavy discounts according to local press.
“Palladium had a terrible session yesterday,” says a note from the Asian trading desk of Swiss refiners MKS Pamp, with the precious metal – primarily used to reduce emissions in gasoline engine catalysts – sinking over 5% by Wednesday night from Monday morning’s new 16-year highs above $1000 per ounce.
“It [seems] the fall was more just a lack of liquidity than any large scale selling,” says the note.
The price of platinum – used in diesel engine catalysts as well as jewelry and a range of industrial processes – meantime rallied on Thursday from this week’s earlier 3.1% drop to $917 per ounce.
That was a 6-year low when first reached in October 2015, and came almost 25% below the metal’s last 5 years’ average.

Gold Prices Drop After LBMA Forecasts 6.6% Gain, Trump Gets 'Shortlist' for Fed Chair

GOLD PRICES extended this week’s drop on Wednesday as bullion-market executives got back to work after the LBMA conference in Barcelona, taking the precious metal’s loss since Monday’s brief 3-week high to 2.0% against a rising US Dollar.
The single Euro currency retreated to 1-week lows versus the Dollar amid speculation over US president Donald Trump’s likely choice as Federal Reserve chief when Janet Yellen’s current term ends in February.
Following the arrest of two political leaders in Catalonia’s independence movement meantime, Spain’s national government in Madrid today said it will suspend Article 155 removing all regional powers if Carles Puigdemont – the pro-independence governor in Barcelona – now calls fresh elections.
Delegates to the London Bullion Market Association’s conference in Barcelona yesterday forecast gold prices rising to $1369 per ounce by the time of next year’s event in Boston, some 6.6% above Tuesday’s afternoon benchmark of $1284.75.
That average prediction is one percentage point below the average annual gold-price rise forecast at the last ten LBMA conferences.
Chart of LBMA annual conference delegates' average gold price forecasts. Source: BullionVault via LBMA
Having said he would decide “in the next 2-3 weeks” almost 4 weeks ago, Trump now has a short-list of 5 candidates for Fed chair says the Associated Press, quoting an un-named official, with ‘low-rate’ Yellen pitted against fellow board member Jerome Powell, ex-board member Kevin Warsh, Stanford academic John Taylor and Gary Cohn of the National Economic Council.
“Interest rate hikes had not been fully priced in [to gold] for next year,” Reuters today quotes Germany bank Commerzbank’s bullion analyst Carsten Fritsch, looking at this week’s drop.
“That has changed massively following speculation that Powell might become the next chairman.”
A decision of ‘no change’ at next month’s Fed meeting is now certain according to betting on interest-rate futures, but the likelihood of a December hike stood at 96.7% on Wednesday morning, up from 82.7% one week ago and just 56.6% this time last month.
Major government bond prices slipped again, nudging 10-year US Treasury yields up towards 1-week highs at 2.33%.
Gold prices stood at $840 per ounce when 10-year yields first fell below that level in late 2008.
The metal sank at its fastest pace on record when yields then jumped back up through 2.30% amid the ‘taper tantrum‘ of 2013.
After US stockmarkets set fresh all-time record highs overnight, Spain’s Ibex 35 index of stocks today held flat, bucking a wider rise to new highs in Eurozone equities.
India’s main indices meantime closed slightly lower but showed an 18% gain for the current Hindu year of Samvat 2013.
With the world’s second-heaviest consumer gold demand after China, dealers and retailers in India continued today to give highly mixed reports of household purchases during the current pre-Diwali festival season – the country’s peak period.

Gold Prices Subdued Despite Re-emerged Geopolitical Tensions and Indian Festivals

GOLD PRICES extended their fall on Tuesday morning in London as the Dollar continued to rise amid speculation off potential new Fed chief and continuing geopolitical tensions in the Middle East and the Korean peninsula, writes Steffen Grosshauser at BullionVault.

Gold slid to $1288 after touching a 3-week high in the previous session before falling through the key level of $1300 per ounce.

Silver tracked gold and dropped to $17.08 per ounce after it had already started falling from a 1-month high at $17.46 on Monday.

Meanwhile, the US Dollar climbed further after a report that US President Donald Trump may appoint the hawkish Stanford University economist John Taylor as the next Fed chair. Trump will meet the current incumbent Janet Yellen on Thursday to discuss her position.

“Gold prices fell on signs of resilience in the US economy, supporting the case for continued rate hikes,” according to a note by Australia and New Zealand Bank Group ANZ.

“A lot of the price drivers that are clouding gold prices are really geopolitical tensions rather than fundamentals,” added Barnabas Gan, analyst at Singapore-listed bank OCBC.

North Korean envoy, Kim In-ryong, warned the general UN assembly that the situation on the Korean peninsula “has reached the touch-and-go point and a nuclear war may break out any moment”.

At the same time in the Middle East, Iraqi government forces seized the northern city of Kirkuk from Kurdish forces – an oil-rich province claimed by both the Kurds and the central government. – The Iraqi government denounced the controversial Kurdish independence referendum 3 weeks ago as unconstitutional.  Unconfirmed reports claimed that Kurdish operators briefly halted oil output of around 350,000 barrels per day, oil prices remained near this month’s high on the back of concerns about future supply. 

Inflation in the United Kingdom rose in September to its highest level since April 2012, according to data from the UK Office for National Statistics. The rise of 3% versus the same time a year ago makes it more likely for the Bank of England to raise interest rates at its next meeting in November.

The pound’s fall since last year’s Brexit referendum is seen as the main driver for the rising inflation. UK Prime Minister Theresa May travelled to Brussels yesterday to meet with European Commission chief Jean-Claude Juncker in an attempt to break the deadlock over Brexit talks.

Over in India the festival of Dhanteras takes place today. Dhanteras is an auspicious day for gold and silver purchases in the Hindu calendar and is the start of the festival of lights, Diwali, which takes place this Thursday.

The Indian demand for gold dropped after demonetisation in November 2016, followed by the implementation of the Goods and Service Tax (GST) in July 2017 and the decision this August for gold jewellery trades to fall under the Prevention of Monetary Laundering Act and the Know-Your-Customer (KYC) rule to crack down on the black market.

But after the government reversed its latest mandate and hence freed potential buyers from the requirement to provide their tax identity for purchases over 50,000 rupees (around $770), jewellers were now expecting a 10-15% increase in purchase of gold jewellery compared to last year, said Saurabh Gadgil, Director at the Indian Bullion Jewellers’ Association. 

Jewellers in Mumbai have also come up with offers such as discounts and even free mobiles and washing machines to further boost sales, after last year saw the smallest Indian household demand since 2009.

Gold Price Up Above $1300 as Asian Shares Record Multi-Decade Highs, Geopolitical Tension Continues

The GOLD PRICE is up above $1305 per ounce this Monday lunch time amid Asian stock market gains to multi-decade highs following Friday’s record US stock levels.

The MSCI Asia Pacific Index rose to its highest level since November 2007, while Nikkei climbed for a tenth day to the highest level seen since Nov 1996. The FTSE increased 0.06% and DAX gained 0.16%.  Spain’s IBEX Index fell 0.67%.

Yesterday Catalan leader Carles Puigdemont called for calm whilst Spain’s central government asked for him to clarify before Thursday whether or not he has declared independence for Catalonia

Meanwhile, tension over North Korea continues to simmer. Today, South Korea and the United States begin week-long joint Navy drills in the waters around the Korean peninsula amid signs North Korea is preparing for another provocative move such as a missile launch. North Korea’s state-run media agency KCNA on Saturday criticized the exercise, calling it a “reckless act of war maniacs.”

In the Middle East, concerns regarding U.S. sanctions against Iran as well as the ongoing conflict in Iraq are seen to be pushing up oil prices.  WTI crude climbed toward $52 a barrel.

“(Gold) Prices have established themselves above $1,300, although the upside may be a little limited, we would expect to see it remain at $1,300-1,310 mark over the course of the week,” said ANZ analyst Daniel Hynes

“The market’s still surely pricing in a rate hike this year by the U.S. Federal Reserve.” 

Over the weekend “The biggest surprise in the U.S. economy this year has been inflation,” Federal Reserve Chair Janet Yellen said at the Group of Thirty’s Annual International Banking Seminar in Washington, while she confirmed the U.S. central bank expects to continue raising interest rates gradually as solid growth, a strong labour market and a healthy global economy lifts prices.

The US core consumer price index rose 1.7% in September up from the prior year, missing estimates for a 1.8% rise according to the data released last Friday.

Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, has consistently undershot the U.S. central bank’s 2% target for more than five years.

In contrast to Yellen, at the same meeting Bank of Japan Gov. Haruhiko Kuroda said “The Bank of Japan will consistently pursue aggressive monetary easing with a view to achieving the price stability target at the earliest possible time.”

Last month, Prime Minister Shinzo Abe of Japan dissolved Parliament and called a snap election for Oct. 22.  Voters will have the chance to weigh in on Abe’s stimulus plan to revitalize Japan’s economy — known as “Abenomics.”

USD index, the value of USD relative to a basket of foreign currencies, gained 0.1% as the yield on 10-year Treasuries raised two basis points to 2.29 %.

The latest data says that net bullish betting by money managers on Comex gold derivatives reduced 2.82% to 561 tonnes last Tuesday, although the speculative net long position gained.  This is the 4th weekly loss and the lowest level in 8 weeks.  


However hedge funds and other money managers trading Comex silver futures and options contracts kept the net long position almost flat from the previous week.  It is still at a six week low.

Silver prices are up to $17.44 per ounce, the highest level in 4 weeks.

Back in Europe, yesterday’s election in Austria that saw the conservative People’s Party led by 31-year-old Sebastian Kurz look likely to take the country’s general election but nationalist Freedom Party (FPÖ) led by Heinz-Christian Strache looked set to emerge as kingmaker in coalition talks after Mr Kurz failed to win an outright majority.

The industry-leading event, London Bullion Market Association (LBMA) annual conference is being held in Barcelona until Tuesday. 

Gold Bars +2.6% for Week So Far as US Fed Dents Dollar, T-Bond Correlation Grows Ever-Stronger

GOLD BARS traded in London’s wholesale market rose sharply early Thursday as the Dollar fell on the currency market following ‘dovish’ comments in the US Federal Reserve’s latest policy-meeting notes.
The greenback then rallied and gold slipped to $1292 per ounce after new data showed US producer price inflation beating analyst forecasts for September with a 2.6% annual rate.
Minutes from the Fed’s “no change” September meeting said “many participants expressed concern that the low inflation readings this year might…prove more persistent.
“A few thought that no further increases in the federal funds rate were called for in the near term, or that the upward trajectory might appropriately be quite shallow.”
Gaining 2.6% from the end of last week, large gold bullion bars touched $1297 per ounce in spot trade on Thursday as the Dollar fell.
Betting on the Fed raising its key interest rate at December’s meeting retreated to 81.7% of all speculative positions, according to data from the CME.
Down from 87.8% yesterday, that was still more than twice the level of this time last month.
Major government bond yields meantime slipped lower worldwide, led by a retreat to 1-week lows at 2.33% per annum in 10-year US Treasury rates.
Typically moving inversely to US bond yields, gold priced in Dollars is showing an increasingly strong negative relationship with 10-year yields, averaging -0.88 over the last 12 months.
That figure would read -1.00 is the correlation was perfectly inverse and the two moved entirely opposite.
Table of gold's average 5-week correlation with 10-year conventional US Treasury bond yields. Souce: BullionVault via St.Louis Fed
Shanghai prices for 1-kilo gold bars rose Thursday to the highest since before China’s National Day holidays last week, holding the premium over comparable London quotes just shy of $10 per ounce.
That was in line with the average incentive for new bullion bar imports to the No.1 gold mining, importing and consumer nation.
“The market has recovered slightly,” says the latest Bullion Weekly Technicals from Germany’s Commerzbank, noting that 1296 represents the gold price’s high of April and June.
“Gold is [now] likely to struggle on rallies to $1309, the 50% retracement of the last leg down. [But] our longer term bias remains bullish.”
Only the Pound fell against the Dollar after the US Fed minutes on Thursday, as UK newspapers reported a split over Brexit preparation plans between Prime Minister Theresa May and her Chancellor Philip Hammond.
Gold bars priced in Sterling jumped near 1-month highs at £987 per ounce, recovering one-third of the last 5 weeks’ drop of 8.1%
London’s FTSE 250 index of mostly UK-focused companies set fresh all-time record highs, gaining 23% since last year’s shock Brexit referendum result.
European stock markets in contrast struggled once more near 5-month highs as the single Eurozone currency touched its highest against the Dollar since 25 September.
Spain’s National Day holiday saw both pro- and anti-separatist marches in Catalan capital Barcelona, with reports from the Associated Press of scuffles broken up by police and the burning of a ‘Senyera’ – the region’s unofficial flag – by far-right Francoists.
Given until Monday to confirm whether or not he has declared independence by the Spanish government in Madrid, Catalan governor Carles Puigdemont today said he had offered dialogue but been met only with the threat of losing all Catalonia’s current devolved powers.
“Message understood,” he tweeted.

Gold Bullion 'In Demand' as Dollar Slips, Fed Minutes Due, Madrid Faces Down Catalan Leader

GOLD BULLION held flat against a falling US Dollar on Wednesday, trading at $1290 per ounce as Madrid delayed taking control of breakaway Spanish region Catalonia after the governor in Barcelona delayed a formal proclamation of independence.
New Japanese data showed strong growth in orders for both machinery and machine tools.
Major government bond prices edged down with global stock markets, nudging borrowing costs higher.
“We expect that geopolitical tensions will remain an important theme for 2018,” says a new gold outlook from French investment and bullion bank Natixis.
“But the effect on precious metals will be limited…[and] we see a world in which nominal rates rise but inflation is relatively flat, leading to rising real rates.
“We also expect for the Fed to raise rates twice and for the ECB to start executing its plans towards normalisation.”
Dollar gold bullion prices tend to move inversely to the level of US interest rates after accounting for inflation in the cost of living.
Notes from the Fed’s most recent policy meeting are due out later on Wednesday. Latest official US inflation and retail sales data are due this Friday.
[NB: You can now receive this daily Gold Price News report free by email here.]
Betting on US Fed rates after September 2018’s policy meeting now shows a 41.2% forecast for a total of 3 hikes between now and this time next year, almost twice its level of four weeks ago on the CME’s FedWatch tool.
Chart of current and recent betting on US Fed Sept' 2018 target rate. Source: CME
“Yes,” says a note from Australian bank Macquarie, “the Fed will have to raise rates – growth remains higher than trend – but this is becoming true elsewhere.
“[So] we think the Dollar is more likely to weaken than strengthen [and] we remain skeptical the US administration can restore US economic outperformance.”
After New York equities meantime closed near last week’s fresh all-time highs overnight, Asian and European shares slipped further on Wednesday.
Spain’s Ibex 35 index bucked the trend, rising another 1.3% following Catalan leader Carles Puigdemont proclaiming but “suspending” independence for the north-eastern region.
Spanish prime minister Mariano Rajoy today asked Puigdemont to confirm or deny whether his speech on Tuesday was in fact a declaration of independence, threatening to invoke Article 155 of the national constitution and taking all regional powers back to Madrid.
Spanish opposition leader Pedro Sánchez of the socialist PSOE said today he would support Rajoy moving on Article 155.
Spain’s benchmark 10-year bond yields retreated from a 1-week high above 1.70%, holding just 0.1 percentage point higher for 2017 to date.
“[This] somewhat calmer situation may prove only temporary,” says a commodities note from Germany’s Commerzbank.
“We believe that gold should therefore remain in good demand.”
Gold bullion priced in the Euro currency retreated 0.6% on Wednesday from yesterday’s 2-week high at €1096 per ounce.
Sterling gold prices meantime held flat for the week so far at £977 per ounce after UK chancellor Philip Hammond said he won’t spend money on planning for a “no deal” Brexit from the European Union until nearer the March 2019 deadline for negotiations to end.

Gold Price Hits 2-Week Dollar, Euro High Ahead of Catalan 'Independence' as Shanghai Premium Leaps, Turkish Lira Sinks

The GOLD PRICE touched 2-week highs for Dollar and Euro investors on Tuesday, extending the metal’s rally from Friday’s 8-week low to 2.4% as world stock markets slipped further from last week’s new record high.
Major government bond prices also slipped with stocks, edging yields higher.
Betting on the likelihood of a US interest-rate rise when the Federal Reserve meets in December slipped back to 86.7%, more than one percentage point lower from Monday but still nearly 3 times the level of betting this time last month.
“Even if financial markets can accept that appointing more ostensibly hawkish central bank leaders has some merit,” says FX strategist Steven Barrow at Chinese-owned bullion and investment bank ICBC Standard, “we don’t doubt that this process of acceptance by the market will require a rise in bond yields – and possibly quite a sharp one.”
Gold priced in Dollars has shown an increasingly negative correlation with movements in US Treasury yields, losing an average $4.67 per ounce over the last 4 weeks for every 1 basis-point rise in 10-year T-bond yields.
Chart of Dollar gold prices and US 10-year Treasury bond yields. Source: St.Louis Fed
Shanghai gold prices slipped in Yuan terms, but the city’s gold premium over comparable London quotes in Dollars jumped to $18 per ounce – twice the typical incentive to new imports into the world No.1 consumer nation – as the Chinese currency leapt on the FX market.
Precious metal prices in Turkey – formerly the world’s No.4 consumer nation, now overtaken by Germany – rose over 4% at the Borsa Istanbul as the Lira sank within 3% of January’s all-time record lows on the currency market amid Ankara’s worsening diplomatic row with Washington.
The US yesterday suspended all non-immigrant visa services in Turkey after the arrest of a consulate staff member for apparent links with the Gülen opposition movement, blamed for last year’s attempted coup.
Borsa Istanbul’s 100 Index of listed companies bounced 1.2% for the day as the Lira sank, holding near Monday’s 3-month closing low but still some 31% higher for 2017 to date.
Madrid’s Ibex 35 meantime fell for the fifth session in 7 since Catalonia’s unofficial referendum on separation, declared illegal by Spain’s courts.
With regional governor Carles Puigdemont expected to declare independence at the parliament in Barcelona today – albeit symbolically – insurance group Catalana Occidente today joined 30 other major firms in moving its HQ from the region.
The UK gold price in Pounds per ounce meantime held near its highest level since mid-September on Tuesday, flattening at £978 per ounce as Sterling rallied after stronger-than-expected UK manufacturing data contrasted with a new all-time record in the country’s deficit with the rest of the world on its trade in physical goods.
Prime minister Theresa May yesterday said her Government is preparing trade contingency plans for the event  of a “no deal” exit from the European Union in March 2019, saying that the “ball is now in [Brussels’] court” for negotiations – a metaphor immediately played back to her by a European spokesman.
While the Dollar price of gold today traded 12% higher for 2017 to date, the gold price in Euros held flat from New Year at €1095 per ounce.

Silver + Gold Jump as China Returns from Holidays, N.Korea + Catalonia Tensions 'Support' After Comex Bulls Retreat

GOLD and SILVER edged higher against a falling Dollar in Asian and London trade Monday, each gaining half-a-per-cent after traders in world No.1 consumer country China returned from national holidays.
Gold prices at one point touched $1284 per ounce, some 1.9% above Friday’s fresh 8-week low, as the US currency retreated against major rivals and world stock markets fell for a second day from last week’s fresh all-time record highs.
Silver touched 2-week highs at $16.98 per ounce, jumping almost 4% from Friday’s low after new US jobs data showed the unemployment rate falling and average wages rising more strongly.
Latest data say that hedge funds and other money managers trading Comex silver futures and options contracts trimmed their bullishness ahead of last week’s key US data.
Despite cutting their net speculative position as a group to a 5-week low however, the Managed Money category of Comex traders were still 130% more bullish overall than their historic average.
Chart of 'Managed Money' net speculative long position in Comex silver futures and options. Source: BullionVault via CFTC
Net bullish betting by money managers on Comex gold derivatives also fell for the 3rd week running on the latest positioning data, down to a 7-week low some 54% larger than the historic average.
Both metals rallied Monday lunchtime against the Euro as the single currency then slipped back on the FX market.
“The ECB is likely to deliver a ‘dovish’ tightening of policy later this month,” reckons Chinese bullion and investment bank ICBC Standard’s FX strategist Steven Barrow, “but yields are still seen drifting higher with periphery yields still at risk from the Catalonian crisis.”
National police today took up positions around the Court of Justice of Barcelona – “unprecedented in the last decade,” according to newspaper El Pais – ahead of the regional parliament possibly moving to declare independence tomorrow, despite October 1st’s officially illegal referendum getting only 40% voter turnout with some 350,000 people protesting their wish yesterday to keep Catalonia part of Spain in the city’s Urquinaona Square.
The government of France today stated that it will not recognize a declaration of independence by the north-east Spanish region.
Spanish bond prices meantime steadied, rallying from last week’s 6-month lows to keep 10-year yields below 1.67%.
For gold, “we [also] expect to see support leading into the October 10 anniversary of the founding of [North Korea’s] ruling Korean Workers Party,” says a trading note from Swiss refiners and finance group MKS, “with many fearing that the hermit state may use this day to carry out a further act of provocation” such as another missile test.
Meantime Monday’s return of Chinese traders from their week-long National Day break saw the Shanghai gold premium – over and above comparable London quotes – leap to $12 per ounce at the city’s afternoon benchmark auction, the highest since June and 40% greater than the historic average.
“Underlying physical demand kept price action buoyant,” says MKS’s Asian trading desk.
“Support remains unchanged at $1263.20,” reckons the latest technical analysis from bullion bank Scotia Mocatta’s New York team, pointing to “the 61.8% Fibo retracement level of the July
Low-September High range.
Below that comes the 200-day moving average, Scotia says, now at $1252.80 per ounce.
Latest import data for leading consumer-nations show silver inflows to China and India growing strongly, with the picture for gold more mixed.

Gold Prices Rise for UK + Euro Investors as Catalan Banks Look for Exit, Hapless May Risks Leadership

GOLD PRICES slipped against a rising US Dollar in London trade Thursday, cutting the metal’s recent losses in terms of other currencies such as the Euro as political tensions rose in the UK and Spain.
Ahead of Friday’s official monthly jobs estimate, the Dollar price of gold held around $1275 per ounce as new data showed claims for jobless benefits rising less than analysts forecast last week.
The UK gold price in Pounds per ounce however erased the last 2 weeks’ drop to trade at £970 as Sterling sank following yesterday’s hapless speech by UK prime minister Theresa May at her ruling Conservative Party’s annual conference, leading to press talk of a leadership challenge.
Gold priced in Euros meantime held €7 per ounce above its floor of the last 8 weeks at €1080 as Spanish prime minister Mariano Rajoy called on Catalonia’s leaders not to make a unilateral declaration of independence following last weekend’s unofficial, unrecognized and fractious referendum.
Asian equities held flat but the Ibex 35 index of Spanish stocks rallied as 2 lenders said they’re preparing to move their head offices from Barcelona.
Germany’s Dax index of major stocks stalled just below Wednesday’s fresh all-time record high.
“Germany’s gold investment market,” says a new report from the mining-backed World Gold Council, “has boomed in the past 10 years in the face of successive financial crises and loose monetary policy.”
Minutes from the European Central Bank’s early-September meeting today showed the 19-nation committee discussing but not agreeing to start reducing its current €60 billion per month of QE money creation and bond purchases.
Keeping its key commercial-bank deposit rate at minus 0.4%, “the recent volatility of the Euro exchange rate represented a source of uncertainty,” policymakers said, with “broad agreement to emphasise the need for…a very substantial degree of monetary accommodation for inflation pressures to build up.”
Chart of Eurozone central bank assets vs. gold priced in Euro currency. Source: St.Louis Fed
Catalan president Carles Puigdemont said overnight that Spain’s King Felipe is a “mouthpiece” of the Rajoy administration, “which [has] been catastrophic for Catalonia and deliberately ignore[d] the millions of Catalans who do not think like them.”
Rajoy this morning called on Puigdemont to suspend “as soon as possible” talks about a declaration of independence – coming tomorrow or Monday – so that “greater evils will be avoided” after civil police attacked voters in last weekend’s unofficial and unrecognized referendum.
Shares in CaixaBank (BME:CABK) leapt 3.5% after the lender said it will move its HQ from Barcelona if Catalonia’s parliament does declare independence, so that it can continue to benefit from being inside the Eurosystem.
Shares in Banco Sabadell (BME:SAB) meantime leapt over 5.0% after its board met to decide where, not if, it is going to re-locate.