GOLD BARS rose above 1-week highs against most major currencies in London trade Friday, extending their recovery from this week’s multi-month lows as world stock markets slipped for a second day from new all-time highs.
Bond yields eased back as debt prices rose with commodity costs.
Popping to $1260 per ounce as the start of New York business approached, the price of large gold bars traded 1.9% above Tuesday’s 5-month low in US Dollar terms, hit the day before the Federal Reserve raised its key interest rate to 1.5% as expected but failed to increase its forecast of rate hikes coming in 2018.
Priced in the Euro, wholesale gold bars rallied 1.4% from this week’s drop to the lowest level since February 2016 at €1053 per ounce.
Friday’s rally in the Chinese Yuan on the FX market meantime helped pushed the premium for gold bars landed in Shanghai up to $13 per ounce over comparable London quotes.
That offered the strongest incentive in two months for new imports of bullion bars to the world’s No.1 gold consumer nation.
China’s next peak in private gold buying will likely coincide with the start of the Chinese New Year of the Dog in mid-February 2018.
“Gold has hit our advocated support of $1239,” says a new technical analysis from French investment and London bullion market-making bank Societe Generale, pointing to the 50% retracement of gold’s rally from December 2016 to September this year.
“The pattern denotes bearish momentum is slowly dissipating,” say the SocGen analysts, “and gold could be setting up for a rebound…towards the 200-day Moving Average at $1265/1267.
“A clear break above this will be essential to denote a larger recovery.”
“Resistance is at the 200-day MA,” agrees last night’s technical analysis from Canadian bank Scotia’s team in New York, saying that the price of gold bars remains “biased to the downside” below that indicator.
So-called “crypto-currency” Bitcoin meantime touched fresh record highs above $17,600 on Friday morning, just beating this week’s earlier peaks.
Racing to “mine” the remaining 5 million units of Bitcoin, “The global industry’s power use already may equal 3 million US homes,” reports Bloomberg, topping the individual consumption of 159 countries.”
“Bitcoin’s parabolic rise has diverted attention from the bubble in equities,” writes the ever-bearish Albert Edwards at SocGen in his weekly strategy note.
“Clients are no longer concerned with overvaluation; they are more concerned about timing and triggers…The extreme bullishness currently prevailing among professional advisors has not been seen in markets since just before the 1987 crash.
“We contrast the bullishness around [Wall Street’s recent] headline [earnings per share] numbers with recent poor whole economy data.”
Meantime in New York, Mehmet Hakan Atilla – a former executive at Turkey’s state-owned Halkbank – was due to testify Friday in his trial for alleged money-laundering on behalf of Iran.
US prosecution witness Reza Zarrab claims Atilla aided his own smuggling of gold bars to bust international sanctions against Iran over its nuclear weapons program.
Losing patience on Thursday with the prosecution’s questioning of a former Turkish police officer on Thursday, “How about this for a novelty,” the judge snapped, “how about asking him what he knows about Mr.Atilla? How about that?”
Atilla’s defense called for a mistrial after the witness then said he had no proof the banker ever met Zarrab or was paid bribes.
