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.

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

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