Author Archives: citygold

Gold Price Pops to 1-Week High as US-China Tensions Worsen, Venezuela's Maduro Thanks Moscow for Support

GOLD PRICES popped to 1-week highs in London trade Friday, rising to show a small gain for 2019 to date at $1285 per ounce as geopolitical tensions worsened over Venezuela and the United States’ relationship with China.
 
Silver prices also halved last week’s drop to trade just below $15.50 per ounce, while platinum popped to $811, trading 1.7% above last Friday’s finish.
 
Global stock markets rose yet again, extending the last month’s gains to 10.6% in Tokyo, 7.5% in Hong Kong, and 6.1% across Western Europe.
 
But with just 32 working days left on the UK Parliament’s schedule before 29 March however, and with France’s finance minister Bruno Le Maire today rejecting calls for the European Union to compromise to avoid a ‘hard Brexit’, London’s FTSE100 index in contrast has rallied barely 2% since this point in December.
 
Euro gold prices rose with €5 per ounce of New Year’s 19-month high of €1138, but UK gold prices in Pounds per ounce held a 1.1% drop for the week as Sterling traded near 11-week highs on fresh chatter about the opposition Labour Party pushing for a second referendum on Britain remaining in the EU.
 
Chart of UK gold price in Pounds per ounce. Source: BullionVault
 
Crude oil meantime held unchanged from last Friday’s finish, “partially pricing in the risk to Venezuela’s crude production” according to one analyst as the United States threatened fresh sanctions against the crisis-hit Latin American state unless elected ruler Nicolas Maduro steps aside for self-declared “interim president” Juan Guaido.
 
“I thank Russia, China, Turkey and other governments and people of the world for their strong support of the legitimately established government of Venezuela,” said Maduro on Twitter, also  retweeting supportive messages with the hashtag #yankeegohome
 
The United States is “meddling…just pouring gas on fire,” said a spokesman for the government of Russia, now with $20 billion of loans and investments in Venezuela on some estimates.
 
Turkey is meantime importing and processing “tons of Venezuelan gold, mined in horrendous conditions overseen by the military,” according to the Israel’s Haaretz newspaper.
 
Beijing today said it “urges the US to abide by the agreed One-China principle” after Washington sent 2 warships through the Taiwan Strait on manoeuvers.
 
Foreign trade through China’s No.1 port rose 5.1% last year to a new all-time high year-on-year to a historic high above $1 trillion, data from Guangdong province said Friday.
 
Overall however, soybean imports from the US sank to a 10-year low while imports of US pork fell in half.
 
“More than the trade war, we think the recent slowdown [in China’s economy] is due to the ongoing effect of non-bank deleveraging,” says a commodities note today from Chinese-owned bullion bank ICBC Standard.
 
“So far [however] the market has only really questioned when rather than if [new government] stimulus will be forthcoming,” ICBC Standard goes on, warning that “[because] China is not currently experiencing the implicit deflation that occurred in both 2008 and 2015…it may be that significant stimulus will not be forthcoming unless or until growth slows to a level akin to these previous troughs.
 
“Q1 could prove a test of investors’ collective patience.”
 
Shanghai gold premiums ended the week $12 per ounce above London quotes, offering a solid incentive for new bullion imports into the world’s No.1 gold consumer nation 2 weeks ahead of the key Chinese New Year holidays.
 
But again, “as we have become accustomed to seeing, the metal failed to break outside of [its] recent range amid muted interest,” says a trading note from bullion refiners MKS Pamp.
 
After lambasting tech giants like Facebook in his speech last year, “China is not the only authoritarian regime in the world but it is the wealthiest, strongest and technologically most advanced,” said billionaire speculator and philanthropist George Soros at the World Economic Forum in Davos today.
 
“This makes Xi Jinping the most dangerous opponent of open societies.”
 
“One should not ask the whole world,” said a speech from China’s vice-president Wang Qishan this week, “to address only the security concerns and comply only with the standards of developed countries or individual nations.”
 
Over in the US meantime, long-time adviser to Donald Trump Roger Stone was today arrested on 7 criminal counts around obstruction of justice and witness tampering related to the FBI’s investigation of alleged Russian collusion in Trump’s winning 2016 presidential campaign.

Gold Bullion 'Capped by Safe Haven Dollar' as Global Growth Slows, EU Challenges London Market

GOLD BULLION failed for the 3rd session running to hold a rally above $1285 per ounce in London on Thursday, edging $6 down despite new data showing manufacturing growth slowing worldwide in New Year 2019.
 
Japan has “stalled” after its best run in a decade, says the Financial Times of today’s Nikkei PMI survey, while the 19-nation Eurozone is “barely growing” with a drop in new orders says Reuters.
 
The European Central Bank today held its negative rates and QE bond purchases unchanged at today’s policy decision in Frankfurt.
 
Global stock markets meantime edged higher after the MSCI World Index fell 1.1% yesterday, cutting its rally from December’s 7-month lows to 9.8%.
 
Crude oil in contrast slipped again, edging down to $60.50 per barrel of Brent and now erasing the last week’s gains after setting 18-month lows in late December.
 
Major government bond prices rose, pushing 10-year US Treasury yields down to 2.71% – a 10-month low when reached during last month’s crash in world stock markets.
 
Chart of gold price (right) vs. US 10-year Treasury bond yields. Source: St.Louis Fed
 
“That gold is not doing better in this environment of uncertainty and slower growth…is testament to the US Dollar being the go-to safe haven at present,” writes strategist Jonathan Butler at Japanese conglomerate Mitsubishi.
 
“Further economic slowdown and an escalation of trade tensions bode ill for industrial prospects. Conversely, gold could look more attractive as a risk hedge in this environment of looser monetary policy in China.”
 
With US-China trade tariffs set to return in full on 1 March, the United States is still “miles and miles” from a trade deal with China, said Commerce Secretary Wilbur Ross to CNBC today.
 
The partial US government shutdown meantime means President Trump cannot give the annual State of the Union address next week.
 
Washington may sanction oil exports from No.1 crude reserves holder Venezuela, officials said overnight, after the US, Canada and several Latin American nations recognized opposition leader Juan Guaidoas as interim president in Caracas amid widespread protests against the violent government of Nicolas Maduro.
 
Trump also refused to rule out using US military force as an “option” in Venezuela, repeating a position he first laid out in August 2017.
 
The UK’s situation with barely 9 weeks until Brexit is a “disgrace” says aerospace engineer Airbus’ CEO Tom Enders, warning that his own firm “will have to make potentially very harmful decisions for the UK” if the country leaves the European Union without an agreed withdrawal deal.
 
The London Bullion Market Association today told Reuters that Brussels has rejected its call to reduce the level of cash which banks must hold against positions in gold, set to jump in 2022 and potentially forcing the City’s bullion banks to quit the business even after Brexit.
 
“We are still optimistic,” says LBMA general counsel Sakhila Mirza, hoping that the European Banking Association – to which the EU has referred the decision – will recognize the gold market’s deep liquidity and lower the required funding ratio from 85% to 50% or preferably zero.
 
While the US-based Comex exchange saw a daily average of $31.3 billion in gold futures contracts change hands last week, the London bullion market traded $37.4bn according to the latest data released today.
 
The EU is also set to sue the UK government over London gold and commodities trading, the Financial Times reports, after London rejected Brussels’ demand to apply European tax rules on derivatives contracts, citing the 1973 Terminal Markets Order.

Price of 'Stable, Cheap' Gold Slips as UK MPs Seek to Block 'No Deal Brexit', 'Yellow Vests' Spread to Spain

GOLD PRICES fell back below last week’s closing level of $1280 per ounce in London on Wednesday, trading unchanged for 2019 so far as rumors said the UK’s opposition Labour Party is moving to block a “no deal” Brexit when the country’s quits the European Union on 29 March.
 
Gold priced in Sterling fell to 5-week lows beneath £985 per ounce as the Pound jumped to $1.30 on the FX market.
 
“[But] the decision remains the same – the deal, no-deal or no Brexit,” said Theresa May today at Prime Minister’s Questions after suffering last week’s historic defeat over her proposed deal, set to go before MPs again next Tuesday.
 
“The global war against globalism arguably started in November 2016,” says a 2019 outlook for gold and silver from Canada’s Scotiabank, pointing to US President Trump’s election victory.
 
“Overall, rising geopolitical risks are no longer a tail risk, and are becoming more frequent but also less ‘tradeable’…Gold is a stable, cheap, un-political (currency) hedge against uncertainty surrounding Brexit, key elections in large/important countries, EU parliamentary elections and the US-Sino trade dispute.”
 
Wednesday’s rally in the Pound extended its rise to the highest Dollar rate since mid-November after newspapers and wires yesterday reported record-high UK employment figures, plus the fastest average UK wage growth in a decade.
 
Measured after inflation however, total average pay showed only the fastest real-terms rise since autumn 2016 at 1.1%  per year.
 
Average UK weekly wages remain more than 6% below their real-terms peak of early 2008, just before the UK and US banking bubble flipped into a global financial crisis.
 
Chart of real vs. nominal UK total average wages. Source: ONS
 
“Manufacturing new orders flattened in the quarter to January,” says UK business lobby the CBI today, “and sentiment about both the business situation and export prospects tumbled on Brexit uncertainty” according to its latest survey.
 
Euro gold prices also fell back Wednesday, erasing the week’s earlier 0.4% rise to trade back at €1128 per ounce.
 
European equity markets added 0.6% on average, while new data showed jobs growth in France slowing down in the 4th quarter of 2018.
 
Taxi drivers in both Madrid and Barcelona today staged more ‘yellow vest’ protests against what they call “unfair competition” from smartphone-app rivals Uber and Cabify.
 
Following last week’s news of a second ‘mega-merger’ in the gold mining sector, an unnamed source today tells Bloomberg that No.9 global producer Gold Fields Ltd (JSE: GFI) wants a merger or takeover by fellow South Africa-based miner AngloGold Ashanti (JSE: ANG), currently the 3rd largest producer behind the newly enlarged Barrick (NYSE: ABX) and would-be No.1 Newmont (NYSE: NEM).
 
India’s Business Standard today reports that the Shanghai Gold Exchange – China’s only legal route for bullion to enter the world’s No.1 gold consumer market – is looking to expand into the No.2 market with a gold exchange in Gujarat’s International Finance Tec-City district.
 
Likely to include a government-approved bullion exchange, India’s official gold policy is likely sometime this month, said Commerce and Industry Minister Suresh Prabhu in late-December.
 
“We are pushing for an integrated gold policy,” he said.
 
India’s huge jewelry sector is again hoping for a cut to gold import duty in this year’s government Budget, due for announcement on 1 February.
 
Now at 10%, India’s gold import duty hasn’t changed since the anti-import crackdown of 2013.
 
Failing in early 2018 to find a buyer meantime for its Scotia Mocatta bullion business, Canada’s Scotiabank will now integrate much of that operation into its global organization, hiring and re-hiring key staff but losing the ‘Mocatta’ name – known in the London bullion market since 1671 – and closing its supplies to the Italian and India jewelry industries.

Gold Bullion 'Drifting' as Venezuela 'Doubles' Bank of England Holding, Army 'Must Choose Tyranny or Democracy'

GOLD BULLION popped to a 2-session high near $1285 per ounce in early London trade Tuesday before easing back as world stock markets fell and ‘safe haven’ government bond prices rose.
 
The British gold bullion price in Pounds per ounce held near the lowest since Christmas at £993 as a variety of UK lawmakers put forward a variety of proposals for resolving Parliament’s Brexit paralysis after Prime Minister Theresa May’s historic defeat last week.
 
Following yesterday’s news of China’s slowest economic growth since 1990, Chinese gold prices today erased 2019’s gains to date, dropping back to ¥281 per gram after hitting ¥288 at the start of January.
 
With “Chinese demand prevalent [only] in pockets”, according to Tuesday’s Asian trading note from Swiss refiners and finance group MKS Pamp, gold prices are “gently drifting on very light volumes.”
 
A slump in China, plus the risk of a “no deal Brexit”, are the biggest global economic risks for 2019 says the Washington-based International Monetary Fund in its new outlook.
 
The IMF’s new forecasts also say that Venezuela – where ruling socialist Nicolás Maduro apparently defeated an attempted army coup overnight – will this year see GDP shrink by 18% as inflation runs above 1.3 million per cent per year.
 
Venezuela annual inflation rate. Source: TradingEconomics
 
Sitting on the world’s largest proven reserves of crude oil, Venezuela has seen its oil output more than halve over the 20 years since the late Hugo Chavez became president.
 
“The army must choose between narco-tyrrany or democracy,” says Venezuela’s opposition leader Antonio Ledezma of the Fearless People’s Alliance, urging the military to support and not attack the “millions” of people he expects to join anti-Maduro protest tomorrow.
 
Venezuela’s national holdings of gold bullion stored at the Bank of England in London “have jumped” says the Reuters news agency, apparently doubling to some 31 tonnes worth $1.3bn after it repaid a long outstanding deal with former-bullion bank Deutsche Bank.
 
Heavily sanctioned for its violent suppression of opposition activists, as well as the personal theft of state assets, Maduro’s government has so far failed to get the return what bullion it still keeps at the Bank of England after the famous “repatriation” under Chavez in 2011.
 
Away from the UK’s Brexit impasse on Monday, lawmakers on the Public Accounts Committee asked the Bank of England if it should move the gold it holds for custodial clients from below its historic Threadneedle Street building so that it can instead safely lease out space – for instance, to UK pub chain Wetherspoons – “to maximize income.”
 
Chart of gold bullion in custody at the Bank of England. Source: BoE
 
Center of the London bullion market – itself heart of the world’s wholesale gold trade – the Bank of England holds the largest single hoard of gold bars outside the New York Federal Reserve.
 
The word “gold” appears once in the Bank’s 2017-18 Annual Report, with no breakdown of its income or costs from bullion custody.
 
Bullion priced in the Euro meantime edged above €1130 again on Tuesday as the ZEW survey showed business sentiment across the 19-nation single currency union holding near its gloomiest since the depths of the region’s debt crisis in 2012.

China GDP Slowdown Sees Gold Price Erase 2019 Gains After Heavy GLD Investing

GOLD PRICES edged down on Monday, erasing 2019’s Dollar gains-to-date after the metal’s No.1 consumer nation China posted its slowest economic growth in nearly three decades, writes Atsuko Whitehouse at BullionVault.
 
Spot gold declined for US investors to $1278 per ounce – down $20 from New Year’s spike to 7-month highs – after Beijing said China’s GDP grew only 6.6% across 2018, the lowest official pace since the global slowdown and aftermath of the Tiananmen Square protests in 1990.
 
Asian stock markets rose but European equities fell, while gold prices for Euro investors fell to €1124, down some 1.1% from start-January’s new 20-month high.
 
Ahead of today’s price drop, the world’s largest gold-backed exchange-traded fund – the SPDR Gold Trust (NYSEArca: GLD) – expanded at its fastest rate so far this year on Friday as investors bought the stock.
 
Favored by some professional money managers wanting gold-price exposure, the GLD grew to need an extra rose 12 tonnes of bullion to back its gold ETF shares, taking the fund to the biggest size since end-June.
Chart of GLD gold holdings. Source: BullionVault via ExchangeTradedGold
 
“Growth is still very important for China,” the FT today quotes economist and former People’s Bank advisor Yu Yongding at the Chinese Academy of Social Sciences.
 
“We can only tolerate a certain slowdown…Yes, we should try to stabilise the [economy’s debt] leverage ratio, but you can’t cut the ratio in a hurry…[because] without growth, everything will get worse.”
 
“US-China trade friction indeed has an impact on economic performance, but we have overcome the overall influence,” adds Ning Jizhe, director of China’s statistics bureau. 
 
“Things are going very well with China and with trade,” said US President Donald Trump to reporters at the White House this weekend, ahead of Chinese vice-premier Liu He visiting for talks at the end of January. 
 
Beijing has reportedly offered to boost imports from the United States as far ahead as 2024 – to the end of Trump’s second term as President should be win re-election next year – as part of trying to resolve the US-China trade war.
 
The UK gold price in Pounds per ounce meantimes moved sideways at £994 on Monday as Sterling weakened after Theresa May told her Cabinet about her ‘Plan B’ for Brexit, due to be presented to Parliament later on Monday following last week’s historic defeat by lawmakers.
 
Amid fresh sanctions by the European Union over last year’s attempted murder of a former spy in the UK city of Salisbury, the Russian state last year increased its monetary gold reserves by a record-breaking 273 tonnes to reach 2,100 tonnes, Moscow said Friday, becoming the 5th largest national holder of bullion.
 
Russia’s gold mining output last year totaled 265 tonnes by end-October.
 
“The monopoly of the US Dollar is not reliable enough, it is dangerous for many,” said President Vlad Putin last spring.
 
“It seems there is an aim to diversify from American assets,” Reuters quotes a source at one Russian gold miner.
 
“[But] in times of uncertainty like today,” says economic historian Catherine Schenk at the University of Oxford, quoted by the Wall Street Journal, “the liquidity of markets becomes even more important.
 
“[So] we have seen a resurgence in the dominance of the Dollar in cross-border debt and a persistence in its role as a reserve currency.”

 

Gold Prices Drop Out of Tight Trading Range, Shanghai Premiums Firm Ahead of Chinese New Year

GOLD PRICES fell out of this week’s tight trading range in London on Friday, falling near the lowest Dollar rate of 2019 to date as world stock markets rose sharply.
 
The metal held a small weekly gain in terms of the Euro, Swiss France and Japanese Yen, but UK investors saw gold priced in the Pound fall to £992 – its cheapest since before Christmas – as Prime Minister Theresa May discussed “next steps forward” with European Union leaders after this week’s historic defeat of her EU-Brexit deal in Parliament.
 
European equities rallied by 1.5% on average and New York opened 0.8% higher despite a 9.1% plunge in shares of electric-car manufacturer Tesla (Nasdaq: TSLA) on a profit warning and jobs cut.
 
Losing 0.5% for the week at $1282, gold bullion’s drop coincided with a steeper drop in silver prices, down to the lowest since 2019 trading began on 2 January at $15.40 per ounce.
 
Platinum fell by less, losing $5 for the week at $805 per ounce, while sister-metal palladium – used primarily to reduce emissions from gasoline-engine vehicles – sank 4.0% from yesterday’s fresh all-time highs above $1400 per ounce.
 
“This is the eighth consecutive year where palladium is going to be in deficit and there are no signs that it is going to go away,” says Dominic Schnider, head of commodities in Hong Kong for the wealth management division of Swiss bank and bullion dealers UBS.
 
“The question people need to ask here is how long it would take for the car manufacturers to switch to platinum, which is trading around $800.”
 
With a little over 3 weeks until Chinese New Year, gold prices in Shanghai held firm for the week in Yuan terms at ¥283 per gram, some 1.8% below early January’s spike to 28-month highs.
 
Thanks to prices for London delivery edging back during Asian trade, that extended the premium for gold delivered in China towards $9.50 per ounce, the upper-end of 2019’s incentive so far for new imports into the No.1 consumer market.
 
Chart of Shanghai Gold Exchange benchmark price. Source: SGE
 
For buyers in No.2 market India, “Prices are just moving higher and higher” as the Rupee retreats from its late-2018 rally, Reuters quotes one Mumbai gold dealer.
 
“Buyers are waiting for a correction in prices and the [Government’s] annual budget as there is speculation of a duty cut [for gold imports].”
 
In contrast to India’s gold demand, silver imports saw “a sharp uptick in 2018” says the Business Standard, quoting analyst estimates of a 30-35% rise as Dollar prices dropped 8% on average from 2017.
 
For Dollar investors in 2019, “[Gold] does need a trigger to spark it upwards,” said a note from commodity brokerage INTL FCStone overnight, “either in the way of a weaker Dollar, renewed stumbles in US equities or clearer indications of slowing US growth.”
 
The giant SPDR Gold Trust (NYSEArca: GLD) ended Thursday unchanged in size for the 5th session running, needing just less than 800 tonnes of bullion to back the GLD’s shares in issue – the most since July.

Gold Price Volatility Low Like Eve of 2000s' Bull Market as France Readies for 'Hard Brexit', ECB Vows 'Stimulus'

GOLD PRICES held tight against the Dollar yet again on Thursday, trading unchanged for the week so far at $1292 per ounce as politics again dominated the headlines in Europe.
 
The US currency edged higher after new data showed a drop in claims for weekly jobless benefits in the world’s largest economy, but applications are growing from government workers missing payment in the ongoing shutdown of some federal agencies over Washington’s failure to agree a budget.
 
Asian stock markets closed the day higher but European stock markets fell for the 5th time in 12 sessions so far in 2019 as British Prime Minister Theresa May met with other UK lawmakers to discuss “finding a way forward” after the Brexit withdrawal agreement she negotiated with the European Union was rejected out of hand by the British Parliament.
 
Opposition Labour Party leader Jeremy Corbyn refused to attend, calling instead for a General Election after failing to defeat May’s Conservative Government with a confidence last night.
 
The UK gold price in British Pounds per ounce briefly dipped this mornig below £1000 for the third time this week, a little over 3% below New Year’s spike to 16-month highs.
 
Euro gold prices held firmer, coming within 25 cents of early January’s 19-month peak above €1136 as the single currency edged back on the FX market.
 
With Brexit now 10 weeks away, France’s Prime Minister Édouard Philippe said on Thursday he has ordered contingency planning to prepare for a so-called ‘hard’ or ‘no deal’ Brexit on 29 March, including €50 million of assistance for ports and airports.
 
Gold priced in the Dollar has so far in 2019 moved barely 1.1% top-to-bottom at London’s twice-daily benchmarking auction.
 
The tightest 3-week range since June last year, that’s approaching the flattest action in gold since Spring 2005 – just before the metal rose 75% over the following 12 months – and before that late-2000, when gold prices began a decade-long rise from multi-year lows.
 
Chart of gold price in US Dollars, with low 3-week volatility matching 2019 so far circled in red. Source: BullionVault
 
“[After] gold remained range-bound yesterday in what was a fairly dull day of trade,” says a trading note from Swiss refining and finance group MKS Pamp, “gold jumped up when Shanghai opened [today] but once again we saw decent [miner] producer offers [to sell] which capped any further rise.”
 
Betting that the US central bank will keep its key interest rate on hold until at least February 2020 meantime grew again overnight, reaching 66% of all speculative contracts from below 40% this time last month according to data from the CME futures exchange.
 
“It might be a good time to pause our interest rate normalization, study the incoming evidence and data, and verify our current location,” said Kansas Federal Reserve Bank President Esther George in a speech Tuesday, repeating the Fed’s new “patience” stressed at New Year by chairman Jerome Powell and again last week by a raft of other Fed officials.
 
“There is no room for complacency,” said Mario Draghi, President of the European Central Bank, on Wednesday when presenting the ECB’s Annual Report to the European Parliament in Strasbourg.
 
“A significant amount of monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term.”
 
After UK inflation showed an uptick in the ‘core’ cost of living for December – rising by 1.9% per year on official data – Eurozone data today showed no change at 1.0% across the 19-nation single currency union.
 
“Recent economic developments have been weaker than expected,” the ECB’s Draghi went on Wednesday, “and the uncertainties, in particular relative to global factors, remain high.”
 
France’s “gilets jaunes” are now preparing ‘Act X’ according to posts on Facebook and other social media, arranging a 10th weekend of protests in Paris despite President Macron beginning what he called a series of “big debates” this week with local politicians from across the Republic to try and address the movement’s concerns.
 
“It’s useless,” says one protester. “Everyone knows what the people are asking! Fewer elected officials, fewer privileges, more transparency, that the people are consulted systematically in case of disagreement!”
 
Meantime in Rome, where the right-wing Lega members of Italy’s ruling coalition have reportedly invited the far-right Brothers of Italy party to join the Government, the finance ministry has begun detailing the 7 new types of state pension available after agreeing Rome’s 2019 budget deficit spending plans with the European Union in Brussels.
 
“In reality,” says newspaper Il Sole 24 Ore, “this adds measures rather than cutting existing ones. In fact, the standard channel of early retirement remains open.”
 
“We need to change this government,” said media tycoon, convicted tax-fraudster and 4-time Italian prime minister Silvio Berlusconi on Thursday, lambasting the left-wing M5s part of today’s ruling coalition while announcing his candidacy in May’s forthcoming European Parliament elections.

Gold Prices Unmoved by UK Brexit 'Soap Opera' as 'Window Closes' on Chance of Higher Euro Interest Rates

GOLD PRICES held flat for the week so far in Dollar terms on Wedneday, trading in London’s wholesale bullion market at $1290 per ounce as global stock markets rose despite the ongoing US government shutdown and fresh political turmoil in the UK over Brexit.
 
Major economy bond prices slipped, edging long-term interest rates higher from their recent plunge from multi-year highs back to start-2018 levels.
 
Nearly two-thirds of speculative betting on US interest-rate futures now sees the Fed holding unchanged until at least February 2020 according to the CME derivatives exchange.
 
Chart of betting on US Fed rates Jan 2020. Source: CME FedWatch
 
“We think the narrow window in which the ECB could have lifted its key interest rate has closed,” says investment and bullion bank HSBC’s economist Simon Wells.
 
“The case for a rate rise on inflation grounds has been weak for a while and with growth slowing, jittery markets and low inflation, we see ECB rates on hold until at least the end of 2020.”
 
Chart of Eurozone headline inflation rate. Source: TradingEconomics.com
 
China meanwhile “remains addicted to ever-higher levels of debt and construction,” says an editorial column in the Financial Times, “despite more than a decade of efforts to rebalance the economy and wean itself off the stimulus introduced in the wake of the 2008 financial crisis.
 
“China’s total debt exceeded 300% of gross domestic product by the end of last year. Much of that investment has gone to waste…[with] more than 1-in-5 Chinese homes in urban areas, or about 65m apartments [sitting] empty.”
 
New bank lending slowed in China in December, new data said yesterday, but it was greater than analysts forecast by more than one-third.
 
With barely 3 weeks until the key gold-buying festival of Chinese New Year, prices in Shanghai today held a $9 per ounce premium to London quotes, extending the recovery in incentives for new bullion imports into the No.1 consumer nation.
 
Stock markets fell Wednesday in both Japan and the UK, where Prime Minister Theresa May today faced a vote of confidence in the House of Commons after Parliament delivered a historic defeat for her Government, voting against her proposed Brexit deal with the European Union by a record margin of 432 versus 202.
 
Expected to survive today’s vote with the backing of those Conservative MPs who voted down her deal last night, May meantime faced calls in what one observer called the “soap opera” to delay the March 29 deadline for Brexit, or to cancel Brexit entirely, or to renegotiate the entire deal with the other 27 member states of the EU in the next 72 days.
 
“We can’t shift on the issue of there being no hard border between Ireland and Northern Ireland,” said Irish Taoiseach Leo Varadkar today, pointing to the Good Friday Agreement of 1998 which helped end 30 years of violence between Catholic and Protestant paramilitaries in the UK province of Ulster.
 
“As someone who lived through the Troubles, we never had a hard border,” countered Northern Irish politician Arlene Foster of the DUP, saying that the “20,000 soldiers in Northern Ireland were there to stop terrorists as opposed to the flow of powdered milk.”
 
The UK gold price in Pounds per ounce spiked to £1018 on news of May’s defeat last night, but immediately fell 1.7% as Sterling than rallied on the FX market, holding above £1000.
 
Germany’s Government has meantime approved the surveillance of right-wing anti-immigration party the AfD by the country’s domestic intelligence agency, a move denounced as “a political witch-hunt” by leaders of the main opposition party against Angela Merkel’s coalition, which won 12.6% of the vote in Germany’s 2017 elections.
 
Over in France, “The answer to the gilets jaunes protests is to apply the same rules for all in matters of work, retirement and social benefits,” writes philosopher Chantal Delsol in today’s Le Figaro.
 
“A movement of this magnitude…supported by a majority of the population, owes nothing to chance or whim. It is a social drama that reveals long-standing fractures.”
 
Gold priced in the single Euro today held near 2-week highs at €1132 per ounce, just €6 below the New Year’s jump to 19-month highs.

Gold Prices Take a Pause as UK Faces Key Brexit Vote, US Shutdown 'Hits GDP Growth'

GOLD PRICES held little changed in a tight range in terms of all major currencies on Tuesday as Asian equities rose but European stock markets held flat ahead of the UK Parliament’s “meaningful vote” on Prime Minister Theresa May’s Brexit deal.
 
With the Withdrawal Agreement proposed by May and the European Union set for a heavy defeat in the House of Commons this evening, betting at UK sportsbook Betfair now says an extension of Article 50 beyond the 29 March deadline for Britain’s exit from the EU is overwhelmingly likely, pricing it at 1/5.
 
The odds of a second referendum are little better than evens at 13/10, while Labour and the current ruling Conservative Party are meantime both 10/11 to win the next UK General Election – something Labour leader and long-time anti-EU campaigner Jeremy Corbyn has said he will call for again in the event May loses tonight.
 
Gold priced in British Pounds today held above £1000 per ounce after yesterday dipping through that level – a 15-month high when reached in December – for the first time since Boxing Day.
 
Chart of gold priced in UK Sterling. Source: BullionVault
 
“British investors [should] bear in mind that if and when Brexit is behind us, we are likely to see a sharp rally in the Pound against the Dollar, and therefore also against the gold price,” says ex-HSBC fund manager Charlie Morris.
 
“That, of course, could take a while, and in the meantime I expect gold’s bull market to continue. But it’s just a headwind to be aware of.”
 
Looking ahead to a Corbyn government, “To avoid economic blackmail by the markets, any socialist government would need to impose limits on the movement of money by investors,” says a column in left-leaning UK political magazine The New Statesman
 
The Goverment of Turkey – now offering to set up a ‘safe zone’ in northern Syria in its row with the US over Kurdish separatists – will meantime welcome Venezuela’s industry minister at a gold refinery near Ankara on Wednesday as the Latin American nation, blocked by US and European sanctions, continues to raise funds by exporting gold to the Middle East.
 
Now the No.5 gold consumer nation, Turkey imported some $900m of gold from Venezuela over the first nine months of 2018, official data suggest.
 
“We went off and we ordered American fast food, paid for by me. Lots of hamburgers, lots of pizza,” said US President Trump last night after hosting  2019 winning college football team Clemson at the White House, where many staff are currently furloughed by the ongoing government shutdown.
 
The longest shutdown in US government history, and still blocked by the impasse between Trump and Democrat politicians over funding his Mexico wall election promise, it’s now costing the world’s largest economy 0.1 percentage points of economic growth per week, an un-named White House official told media overnight.
 
Missing analyst profit forecasts and reporting J.P.Morgan’s worst bond-trading results since the Lehmans’ crash of 2008, the investment bank’s CEO Jamie Dimon said today that US GDP growth could slow to zero if the shutdown continues.

Gold Prices 'Supported' by Geopolitics But 'Short-Selling' Blocks $1300

GOLD PRICES dropped $6 to erase an overnight rise at the start of US trading on Monday, moving back to last week’s finish of $1290 per ounce as world stock markets fell even as major government bond yields slipped once more.
 
“The geopolitical risks have started to induce some safe-haven buying,” reckon analysts at Australasian bank ANZ, “[because] investors are becoming increasingly worried about the Brexit negotiations. At the same time, there appears no end in sight for the US government shutdown.”
 
“The on-going US government shutdown, Brexit jitters and trade concerns are all supportive for the yellow metal,” agrees a trading note from Swiss refiners and finance group MKS Pamp, “and we are likely to see any downside moves bought into to restrict further declines.”
 
But that by itself won’t be enough to push gold prices higher, MKS goes on, saying that “the metal currently sits firmly within the middle of the $1280-1300 range and it is difficult to see a catalyst for a break-out over the near term”
 
“There is a key resistance between $1290 and $1310,” says spead-betting bookmaker CMC.
 
“Gold will need to do substantial work to rise above this level as generally we see traders shorting into it.”
 
Short-selling of Comex gold futures and options by hedge funds and other money managers reached record levels last October, but positioning data from US regulators has now not been available since end-December thanks to the partial shutdown of US government agencies in the spat between President Trump and Democrat lawmakers over his Mexico wall budget demand.
 
Chart of Managed Money net speculative position in Comex gold futures and options, notional $bn. Source: BullionVault via CFTC
 
Moved closely in line with the net balance of speculative betting over the last 12 months, the gold price has risen in each of the 4 weeks since the US government shutdown suspended publication of positioning data by regulatory agency the CFTC.
 
Following smartphone manufacturer Apple’s warning over falling sales in China, new data on Monday showed Chinese exports of goods falling in December but imports falling nearly twice as hard. Together that boosted the No.2 economy’s overall trade surplus to a new series record.
 
Eurozone data meantime showed industrial output across the 19-nation single currency area shrinking 3.3% per year in November.
 
After this month’s stark turnaround in US Federal Reserve comments on the 2019 outlook for interest rates, Eurozone central-bank chief Draghi gives a speech Tuesday, and Bank of Japan chief Kuroda speaks Thursday.
 
Gold prices for Eurozone investors today peaked at 1-week highs of €1130 per ounce – some 3.7% higher from this point in January 2018 – while the UK gold price in Pounds per ounce rallied £5 after coming within £1 of slipping below £1000 for the first time since Christmas.
 
Prime Minister Theresa May today urged UK lawmaker to vote for her Brexit deal in tomorrow’s key Parliamentary vote, saying that the world’s No.5 economy risks “catastrophic harm” if it hits either a “no deal” exit or fails to leave the European Union as scheduled on 29 March.
 
Turkey’s President Erdogan meantime called on US President Trump to back down over his threat to “devastate Turkey” economically if it strikes against Kurdish forces in northern Syria, accused of terrorism by Ankara but Washington’s former allies against the ISIS death cult.