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Gold Prices May 'Test $1250' as Dollar Rises, Crude Oil Gains on US/China Trade War 'Truce'

May 21, 2018
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GOLD PRICES fell $10 to new 5-month lows against the rising US Dollar on Monday in London after Washington said the US-China trade war is “on hold”, writes Steffen Grosshauser at BullionVault.
 
Gold touched the lowest level since the end of December at $1282 per ounce before bouncing back to $1285 while the US Dollar rose to a 5-month high versus its major peers on the currency markets.
 
Most Asian and European stock markets also rose after US Treasury Secretary Steven Mnuchin said that the US and China have set up a framework for addressing future trade imbalances, and have also agreed to suspend the tariff threats that led to high volatility on global markets earlier this spring.
 
With the Russian energy minister and his Saudi counterpart scheduled to meet in St.Petersburg this week to discuss Opec output quotas, the price of Brent crude stayed near 4-year highs at $78 per barrel.
 
US oil futures last week reached the highest close in more than three years. 
 
Priced against oil, one ounce of gold today equaled fewer than 18 barrels of crude, the lowest value since late 2014 and 
 
Chart of 1-ounce of gold priced in barrels of US crude oil. Source: St.Louis Fed
 
“You have this combination of technical factors which is at the moment un-supportive [for gold],” said Swiss bank UBS analyst Dominic Schnider in Hong Kong.
 
“As long as the Dollar is on the firm side, gold is under pressure,” 
 
“We expect gold price weakness to continue in the coming weeks and months,” reckoned ABN Amro commodities strategist Georgette Boele.
 
“It is likely that gold prices will fall below $1275 an ounce and test $1250 an ounce this year.” 
 
For Eurozone investors on Monday, gold prices held within 0.5% of last week’s finish, trading at €1095 per ounce as Italy’s Eurosceptic Five Star Movement and right-wing League party reached a coalition agreement to suggest a new Prime Minister.
 
France’s economy minister Bruno Le Maire on Sunday warned Italy’s new coalition to “respect its commitments on debt and the deficit.”
 
“A debt crisis in Italy would have a far bigger impact than one in Greece,” notes Commerzbank analyst Eugen Weinberg.
 
The main Italian stock index fell by more than 1.8% in early deals, while the German and other European markets were closed today due to a public holiday. 
 
The UK gold price in Pounds per ounce meantime recovered Monday’s early £5 loss to trade at £960 as Sterling fell amid reports that the ruling Conservative Party may be preparing to call yet another election this year and Scotland’s First Minister Nicola Sturgeon said she will push for another referendum on splitting away from the UK once the Brexit trade deal with Europe becomes clear.

Gold Goes 'Comatose' as Buyers Shun Drop Thru' $1300 Price

May 18, 2018
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GOLD PRICES moved in a tight $5 range above yesterday’s new 2018 low against a rising US Dollar on Friday, holding a 2.5% drop for the week at $1287 per ounce as Asian stockmarkets climbed back to unchanged and European equities held a half-a-per-cent gain.
 
The rising Dollar also pushed other non-US currencies down to 5-month lows, with the Euro falling back below $1.18.
 
Crude oil outpaced the greenback however, setting new 3.5-year highs near $80 per barrel of Brent even as the Dollar gained on the forex market. 
 
“Physical gold demand is [only] slightly better than it was when prices were above $1300,” Reuters quotes Hong Long dealer Ronald Leung at Lee Cheong Gold, pointing to gold’s relative strength against weak Asian currencies.
 
“Demand picked up a bit, but not as quick as it should have been” following Tuesday’s drop, agrees a dealer in Singapore.
 
Gold prices in India – the No.2 consumer nation – this week slipped only 1.5% from last Friday’s near 2-year high as the Rupee continued to fall on the currency market.
 
Gold’s 2.3% Dollar drop since Monday has also left the SPDR Gold Trust (NYSEArca:GLD) unchanged in size – the first time that shareholdings in the world’s largest gold-backed ETF haven’t responded to such a large price move since December.
 
Mutual funds and other institutional investors owned more than 41% of the SPDR Gold Trust (NYSEArca:GLD) at end-March, regulatory filings for end-March show, the highest proportion of professional rather than private-investor ownership since Q3 2016.
 
That compares to a low of 32% when gold prices bottomed at end-2015.
 
Chart of GLD gold backing. Source: BullionVault via ExchangeTradedGold
 
Calling early 2018’s gold price action “range-bound [would be] somewhat of an understatement,” said a note from Australian financial group Macquarie’s Matthew Turner last week.
 
Measuring the US Dollar gold price’s trading range as percentage from low to high over January to April, 2018 has seen the lowest volatility since the United States abandoned its fixed-exchange rate Gold Standard in 1971.
 
“Given heightened volatility in equity markets this is quite remarkable,” says Turner, calling gold “the comatose metal.”
 
“We expect more price weakness towards $ 1250 per ounce,” says a new note from Dutch bank ABN Amro, “[which] should be an opportunity to position for strength in 2019.”
 
Trading down to 5-month lows at $884 per ounce meantime Friday, platinum prices have shown “no improvement” since Tuesday’s drop, notes Belgian refining group Umicore in a trading note.
 
Despite bouncing 20 cents from Tuesday’s drop, “Silver is not far away from its annual low” says MKS, with the metal reaching $16.41 as New York dealing began today.
 

Gold Price Bounces from New 2018 Low as Real US Yields Hit 7-Year High

May 17, 2018
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GOLD PRICES set fresh 2018 lows for the third day running in London trade Thursday, dipping below $1286 per ounce as US bond prices continued to fall, pushing longer-term interest rates up to yet more 7-year highs.
 
The rising US Dollar also pushed the Euro currency back down near this week’s drop to the lowest level since December.
 
Gold prices then rallied $5 as world stock markets gained, the Dollar edged back, and bond prices steadied – pulling 10-year US Treasury yields back down from 3.10% – on a surprise rise in the number of people starting to claim US jobless benefit payments.
 
Adjusted for market-expectations of inflation, the real 10-year yield has risen this week above 0.9%, a level touched on only one day since May 2011.
 
That day, in September 2013, saw gold prices extend a rally from the Spring’s historic crash as weak US jobs data then raised doubts over the Fed’s timeline for starting to ‘taper’ the size of its monthly quantitative-easing bond buying.
 
Real yields have shown a strongly negative relationship with Dollar gold prices over the last decade. On a 52-week analysis of weekly data, the median correlation – which would read +1.0 if they moved positively together – has been minus 0.7.
 
 
Tapering began in 2014 and new QE ended that October. Since the Federal Reserve Banks’ total assets peaked in January 2015 at $4.5 trillion, they have now shrunk by $158 billion – some 3.4%.
 
Of that reduction, more than half has come in the first five months of 2018 as the central bank stops re-investing money from maturing US government bonds.
 
“[This] may not be tantamount to tightening,” reckons senior IMF economist Manmohan Singh, but instead have “an easing effect [because] US Treasuries in the hands of the market, with reuse, are likely to lubricate markets [whereas] excess reserves have remained idle in recent years.”
 
But “if the expansion of the Fed’s balance sheet was essential to preserve easy monetary conditions,” notes World Bank director Otaviano Canuto, “the reduction of the former can be expected to tighten the latter.”
 
Should the Dollar continue this month’s rise “gold prices might still have room to correct over the next few weeks,” says a note from French investment and bullion bank Natixis’ Bernard Dahdah.
 
But while Dahdah now forecasts a drop to $1260 in 2019’s average gold price, “We think [Dollar prices] could pick up towards the last quarter of [this] year as the ECB preps the market for a normalisation of its monetary policy,” he writes, “heading again towards the $1330 level.”
 
Silver bounced harder than gold prices as New York opened for business on Thursday, halving this week’s prior 2.9% drop to reach $16.47 per ounce, barely changed for May so far.
 
Platinum also rallied after dipping beneath $890 per ounce for the first time since mid-December.
 
Euro gold prices today held 1.5% below last week’s 8-month peak, trading at €1093 per ounce.
 
Gold priced in Sterling has now halved the last 4 weeks’ rise of 5% to trade at £955.

Gold Price -$300 vs 'King Dollar' Since US Rates Last This High, GDP Forecast at 14-Year Best

May 16, 2018
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GOLD PRICES fell to new 2018 lows against a rising Dollar for the second day running on Wednesday, falling further below $1300 per ounce as world stock markets dropped and longer-term interest rates touched new 7-year highs after stronger-than-expected US economic data.
 
After Tuesday saw March’s retail sales revised higher while New York State manufacturers reported the strongest inflation since 2011, the Atlanta Fed now sees US GDP growing 4.1% per year between April and June, the strongest quarter since 2004 and higher than all the ‘blue chip’ economic forecasts it tracks.
 
Betting on US Fed futures contracts today put a 95% certainty on the Federal Reserve raising its key interest rate at mid-June’s meeting according to the CME’s FedWatch tool, with a 44% chance of 2 further rate rises after that in 2018 up from 34% this time last month.
 
“As rates rethink the Fed outlook,” says FX strategist Kit Juckes at investment bank Societe Generale, “the Dollar remains king of the FX market.
 
“Last time this happened, it took a significant US equity market correction to stop the move.”
 
Major government bond prices extended their drop on Wednesday, forcing up the yield offered to investors as well as longer-term financing costs.
 
The last time 10-year US Treasury debt offered today’s 3.06% yield, Dollar gold prices were $300 per ounce higher.
 
Chart of 10-year US T-bond yields vs gold price. Source: St.Louis Fed
 
Gold prices opened Wednesday in Shanghai 1.4% lower for this week so far against the Yuan, sparking what Swiss refining and finance group MKS Pamp’s daily note calls “persistent demand” in wholesale trade.
 
“Good volumes were seen today in Asia, although price action remained fairly contained for the yellow metal,” it adds, with speculative traders and wealth management sellers “countering Asian physical buying.”
 
Shanghai premiums edged up to $7.50 per ounce above quotes for London settlement at China’s afternoon benchmarking, still below the typical incentive for new imports into the No.1 consumer nation.
 
Inflation across the 19-nation Eurozone – the world’s largest economic bloc – held at 1.2% per year in April, new figures said today.
 
Preliminary German GDP data for the first quarter yesterday missed analyst expectations, notes Belgian refining and technology group Umicore in a note, helping push the Euro lower against the Dollar.
 
The Dollar then jumped against emerging-economy currencies as the Financial Times reported Turkey’s president Recep Tayyip Erdoğan telling a lunch in London that he plans to become more “influential” over the central bank’s interest policy – comments causing “shock and disbelief” among the major investment-fund managers present.
 
Inflation in Turkey – the No.5 gold consumer nation – last month rose near 11% per year.
 
The Central Bank of the Republic of Turkey’s key lending rate has been held at 8% since late 2016, when Erdogan railed against tightening policy, claiming that “higher interest rates cause inflation, not tomatoes, not pepper.”
 
With the Lira today setting yet more all-time record lows against the Dollar, “Necessary steps will be taken, also considering the impact of these developments on the inflation outlook,” said the CBRT in a statement.
 
Priced in the Euro gold meantime halved Tuesday’s drop to trade at €1095 per ounce, while the UK gold price in Pounds per ounce also traded around 2-week lows at £955.
 
Silver meantime matched gold’s 2.5% loss against the Dollar for this week so far, trading at 1-month lows of $16.25 per ounce.
 
Platinum touched its lowest since mid-December at $891 per ounce, down 3.3% from last Friday’s finish.

Gold Prices Flat vs Falling Dollar Amid Jerusalem Violence, Brexit Wrangling, Italy Confusion

May 15, 2018
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GOLD PRICES stayed flat against a weak US Dollar on Monday in London, holding around $1319 per ounce as violence flared in Jerusalem, where the United States today opened its Embassy to Israel, moving it from Tel Aviv, writes Steffen Grosshauser at BullionVault.
 
Press reports said 41 Palestinians were killed and 1,700 injured as Israeli forces fired teargas and live ammunition at protests against the opening of the new US embassy, recognizing Jerusalem as the capital of Israel, attended by President Trump’s daugher Ivanka and her husband Jared Kushner.
 
With gold unmoved in Dollar terms, the US currency’s fall from this month’s new 2018 record highs on the FX market pulled bullion prices lower for non-US investors, with Sterling and Euro prices slipping £5 and €4 per ounce respectively to £970 and €1100 – down some 1% from last week’s near 8-month peaks.
 
While most Asian stock markets advanced, European stocks as a whole retreated amid fresh wrangling in the UK‘s governing Conservative Party over a post-Brexit trading agreement with Europe plus confusion over who Italy’s rightwing League party and anti-establishment 5-Star Movement will jointly propose today for Prime Minister.
 
From a technical point of view, gold’s 50-day moving average is likely to slip below the average of its last 100-day prices soon, Bloomberg quotes technical analysts Monday.
 
That tends to be considered a bearish signal.
 
Chart of gold price's 50 (black), 100 (gray) and 200-day (red) moving averages. Source: Bloomberg
 
“From a geopolitical point of view,” reckons Joshua Rotbart of bullion services providers J.Rotbart & Co in Hong Kong, “we are currently in an equilibrium between the prospects of a ‘good end’ in the Korean peninsula against the looming conflict in the Middle East between Iran and Israel.
 
“The price [of gold] reflects this balance.”
 
Israel’s stock market was little changed Monday, as was its Shekl currency, while crude oil prices fell again from the multi-year highs reached last week after the Opec cartel of producer nations signalled it has enough spare capacity to act as a “cushion” if US sanctions against Iran hit exports from the group’s third largest member.
 
Investor interest in the world’s largest gold-backed ETF, the SPDR Gold Trust (NYSEArca:GLD), shrank for the second week in a row last week, down 0.7% to decrease the amount of bullion needed to back the fund’s shares by 6.5 tonnes.
 
That brought the GLD’s total holdings down to the lowest in a month at 857 tonnes.
 
On the Comex derivatives exchange, in contrast, hedge funds and other speculative money managers raised their net long position in gold futures and options by 1.2% in the week to 8 May, the day when US President Trump announced the US’ withdrawal from the Iran nuclear deal.
 
Speculators’ net position on Comex silver was negative for the twelfth out of the last 13 weeks, according to the latest US Commodity Futures Trading Commission data. 
 
Silver tracked gold prices to stay unchanged Monday against the Dollar at $16.66 per ounce.
 
Platinum also began the week flat in Dollars at $923 per ounce as mining and refining executives met with traders and analysts in London for the annual Platinum Week series of events and seminars.

Gold Price Erases Last Week's Drop, Platinum at $400 Discount as S.African Miners Struggle

May 11, 2018
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GOLD PRICES lagged silver and platinum but neared their first weekly gain in four against the Dollar on Friday, erasing last week’s 0.8% loss to trade at $1324 per ounce.
 
World stock markets also showed a small gain for the week as bond prices rose, edging longer-term interest rates down from their recent multi-year highs as the US Dollar trimmed May’s gains on the FX market following Thursday’s weaker than expected US inflation data.
 
Heading for its highest weekend in Euro terms since September at €1100, the UK gold price in British Pounds per ounce also retained this week’s 0.5% gain to hold around 4-month highs of £976 after the Bank of England yesterday held short-term UK rates unchanged at what was a record low of 0.5% when first reached in early 2009.
 
Silver doubled gold’s week-on-week Dollar gain to add 1.5%, touching its highest intra-day price since 23 April at $16.80 per ounce.
 
Prices to buy platinum bars rose more steeply still, adding 1.8% for the week in US Dollar terms to peak at $928.
 
Ahead of Monday’s start to London’s annual Platinum Week of seminars, events and business meetings however, that still left platinum prices near a $400 per ounce discount against gold.
 
That was a new all-time record discount to gold for the white precious metal – which finds 40% of annual end-use in catalysts to reduce harmful emissions from diesel engines – when first reached at the end of March.
 
Chart of platinum's premium to gold, US$ per ounce. Source: BullionVauilt via LBMA, LPPM
 
Mine output in South Africa – which produces 70% of the world’s newly-mined platinum each year – shrank 6.1% in March from the same month in 2017, new data showed this week.
 
Monday’s results from No.3 platinum mining company Lonmin (LON:LMI) “will make or break” its proposed takeover by Sibanye-Stillwater (JSE:SGL), says South Africa’s Business Day.
 
“At the current rate of cash burn,” the report quotes London-based brokerage and analysis providers Liberum, “Lonmin will be pushed into net debt before the year end, scuppering the proposed merger” before Sibanye’s shareholders get to vote on the deal.
 
Shares in No.2 platinum miner Implats (JSE:IMP) meantime rallied today from 19-year lows after it invited tenders to build new waste-processing facilities at its Marula project on the eastern limb of South Africa’s Bushveld Complex of mineral deposits – scene of violent unrest and stoppages so far this year over pay and working conditions.
 
“Gold seems yet again to have found a significant floor,” says the latest technical analysis of precious metal prices from French investment bank Societe Generale.
 
“[The] succession of daily Hammer patterns at $1302/1300 levels suggests bearish pressure has alleviated.”
 
“New resistance comes in at $1326,” agrees the latest daily note from bullion bank Scotia Mocatta’s New York office, pointing to “the 38.2% Fibo retracement level of the April high [to] May low range…which nearly coincides with the 100-day moving average.”
 
For gold’s longer-term investment outlook, says specialist consultancy Metals Focus, “the recovery in the [US] Dollar, along with further gains in Treasury yields, present key headwinds to gold prices in the coming months.
 
“That said, we retain the view that macroeconomic conditions will favour gold later this year…An unabated rise in oil and yields has the potential to derail equity markets and negatively impact risk sentiment.”
 
Crude oil held Friday near this week’s new 3.5-year highs, trading above $77 per barrel of European benchmark Brent.

UK Interest Rates Below Inflation for Longest in 7 Decades, Sterling Price to Buy Gold Jumps

May 10, 2018
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BUY GOLD prices jumped to 4-month highs against the British Pound in London trade Thursday after the Bank of England failed to raise UK interest rates yet again, despite inflation continuing to exceed its official target of 2.0% per year.
 
With Tehran vowing “resistance” and denying it has any military bases in Syria after Israeli warplanes attacked what Tel Aviv called Iranian positions in the two countries’ war-torn neighbor last night, world stock markets edged higher as crude oil set fresh 3.5-year highs above $77 per barrel of Brent.
 
US President Trump’s plan to restore sanctions on Tehran over its nuclear research program “may have implications for the [global] market balance,” warns the International Energy Agency, noting that Iran “exports 2.5 million barrels of oil a day and is the world’s fifth-largest exporter.”
 
Gold priced in US Dollars ticking further above last Friday’s finish to reach $1318, on track for the first weekly gain in five.
 
Prices for Eurozone investors wanting to buy gold also rose again, re-touching Wednesday’s new 6-month highs above €1109 per ounce.
 
With consumer price inflation in the UK last reported at 2.5% per year, the Monetary Policy Committee kept Bank Rate at 0.5%, saying it expects inflation “to fall back slightly more quickly” than previously thought.
 
The Bank of England also cut its 2018-2020 economic growth forecasts for the UK, citing risks and uncertainty over next year’s Brexit deadline for leaving the European Union.
 
Across the last 10 years, UK interest rates have now matched or exceeded the pace of consumer-price inflation in only 23 of 120 months.
 
Measured against the Office for National Statistics’ long-run consumer price index, interest rates have now lagged inflation for 101 months – the longest unbroken stretch of negative real returns to bank savers since the Great Depression and war-time era of 1938-1951.
 
Chart of Bank of England interest rate after inflation. Source: BullionVault
 
Prices to buy gold with British Pounds jumped 0.7% within 10 minutes of today’s BoE decision, touching the highest level since mid-January at £975 per ounce but still almost £100 below the peak hit after 2016’s shock Brexit referendum result.
 
“Until a few weeks ago, a further quarter point rate hike to 0.75% looked almost guaranteed,” says Tom Stevenson, a director at brokerage group Fidelity International. 
 
“But very weak UK GDP growth figures and fast-retreating inflation has seen a rapid reversal of the Old Lady’s increasingly unhelpful forward guidance.”
 
Major government bond prices also rose Thursday, nudging longer-term interest rates lower and pulling 10-year US Treasury yields back below 3.0%.
 
Investor demand for gold-price exposure through exchange-traded trust funds slipped on Wednesday, with the SPDR Gold Trust (NYSEArca:GLD) needing 2 fewer tonnes of bullion to back its shares at 862 tonnes.
 
April saw the heaviest monthly demand to buy gold exposure through ETFs since early 2017, data from the mining-backed World Gold Council show.

Gold Falls to End-2014 Low vs Crude Oil Price as Trump's Anti-Iran Move Whacks Consumer Currencies

May 9, 2018
Latest News
GOLD PRICES rallied Wednesday in London after dipping within $2.50 of last week’s new 2018 lows versus the Dollar following President Trump’s decision to pull the US out of the 2015 deal with Iran over its nuclear research program.
 
Wholesale gold bullion bars bounced almost $10 per ounce from $1304.50 as world stock markets failed to follow Wall Street higher and major government bond prices fell, driving longer-term interest rates higher.
 
The yield offered by 10-year US Treasury debt rose back near 4-year highs above 3.0% for the second time in a fortnight, while crude oil prices jumped 2.5% to new 3.5-year highs above $70 per barrel of US benchmark WTI.
 
That pushed the ratio of gold priced in barrels of crude oil down to 18.5 – its lowest level since late 2014.
 
Chart of the gold price in barrels of crude oil equivalent per ounce, monthly to March 2018. Source: St.Louis Fed
 
The jump in crude oil prices also hit the energy-importer currencies of major gold-consumer nations India and Turkey on the foreign exchange market.
 
Domestic gold prices in India rose towards the near 2-year highs set last month, when bullion imports to the No.2 consumer nation fell by two-fifths from April 2017.
 
With the Lira falling to new all-time record lows meantime as Washington moved to re-impose sanctions on neighboring Iran, the central bank in Ankara today auctioned off $1.5 billion of foreign reserves to try and support the Turkish currency‘s exchange rate.
 
Iran’s central bank itself said it had prepared for Trump’s decision, and would ensure sufficient liquidity of foreign exchange to support the Islamic republic’s economy.
 
The central bank in Tehran also on Wednesday announced strong pre-orders for its latest release of Bahar Azadi gold coins.
 
“In the very short term, it looks as if the impact of heightened geopolitical worries was limited to oil markets,” Reuters quotes Japanese finance house Mitsubishi UFJ Morgan Stanley Securities’ strategist Norihiro Fujito.
 
“[But] US sanctions could affect various industries, and tensions between Iran and Israel look set to intensify. Those will begin to cap share prices.”
 
“The initial risk-off sentiment following President Trump’s Iran announcement [soon] dissipated,” says today’s Asian trading note from Swiss refiners and finance group MKS Pamp.
 
“Modest Chinese demand held bullion above $1310…however it wasn’t long until gold turned offered once again.”
 
Gold prices fell less steeply against non-Dollar currencies, rising to 1-week highs versus the Japanese Yen and trading at €1105 per ounce for Eurozone investors – up 0.7% for the week so far – as poor French industrial output and Spanish retail sales figures added to yesterday’s weak import and export numbers from Germany.
 
Ahead of tomorrow’s interest-rate decision from the Bank of England however, the UK gold price in Pounds per ounce in contrast fell £10 from Tuesday’s near-4 month highs at £972 as Sterling jumped on the FX market despite worsening UK economic figures.
 
After new data Tuesday said UK house prices fell at the fastest monthly pace since 2010 in April, separate figures today said retail sales in the world’s 5th largest economy “fell off a cliff” last month, dropping at the fastest pace on record.
 
The Pound leapt 1 cent versus the Dollar however, rallying towards $1.36 after hitting the lowest level of 2018 so far last week.
 
Washington’s key Nato allies the UK, France and Germany overnight re-affirmed their commitment to the 2015 nuclear-research deal with Iran, saying they “regretted” Trump’s decision.
 
Trump himself said at a press conference late Tuesday that, in what he called “a message to the long-suffering people of Iran…the people of America stand with you” against Tehran’s theocratic government.

Gold Bullion Drops vs US Dollar But Tests 2-Year High for Australia's Miners

May 8, 2018
Latest News
GOLD BULLION rose near 2-year highs against the Australian Dollar on Tuesday even as gold priced in US Dollars fell back below $1310 – its lowest level in more than a month when first reached last week.
 
The second-largest gold mining nation behind China, Australia has grown its annual output by 15% since the peak year of 2012 for US Dollar prices.
 
Setting a new annual record of 295 tonnes in 2017 as gold exploration spending rose, Australia’s output accounted for some 9% of global mine production according to specialist analysts Thomosn Reuters GFMS, launching their new Gold Survey 2018 today.
 
Weak retail sales data on Tuesday, plus a new government budget promising higher spending and lower taxes, saw the Australian Dollar fall hard, hitting an 11-month low against the US greenback.
 
That pushed bullion prices for Australian investors, consumers and mining producers up to A$1757 per ounce – an 18-month peak now touched 4 times in the last 6 weeks.
 
Chart of gold bullion priced in Australian Dollars, last 20 years. Source: BullionVault
 
Easing back from yesterday’s 16-week high in the UK gold price in Pounds per ounce – set at £973 as London’s market stayed shut for the May Bank Holiday – wholesale bullion also hit 4-month highs against the Euro on Tuesday, as the single currency hit a new 2018 low on the foreign exchange market.
 
The Euro fell this morning below $1.19 – down over 5% from late February’s 3-year highs versus the US Dollar – after new data yesterday put Eurozone investor confidence at the weakest since early 2017 while new orders at German factories shrank in April from March, defying analyst forecasts.
 
The last time the Euro traded this low against the Dollar, gold was at €1074 and $1279 against the two currencies.
 
Tuesday morning saw London gold bullion trade 2.7% higher against both currencies, peaking at €1104 and $1314 per ounce.
 
“Global mine production inched lower last year,” says today’s new GFMS report, “the first annual drop since 2008.
 
“Environmental concerns and a crackdown on illegal mining were the driving force,” it says, forecasting a small rise in 2018 to a new all-time high marking “a cyclical peak in mine production.”
 
Predicting that bullion prices will average $1360 this year – the highest since the crash of 2013, and with the potential for a spike to $1500 – GFMS expects this year’s gold mining growth to come from Asian producers led by Indonesia, Mongolia and China.
 
“On the other hand, United States, Tanzania and South Africa are expected to show strong declines year-on-year.”

Trump FX Tweets 'Coming Soon' as Gold Price Hits 2018 Low in Dollars on 'Strange' US Jobs Data

May 5, 2018
Latest News
GOLD PRICES rose Friday against all major currencies except the US Dollar and Japanese Yen as new data showed unemployment in the United States falling to a new 17-year low.
 
Both the total of jobs added and average pay growth failed to meet analyst forecasts for April.
 
But as more people left the potential US workforce, the jobless rate fell to 3.9%.
 
Wall Street opened the day lower but European shares recovered earlier losses as commodities ticked higher with bond prices, nudging long-term interest rates lower.
 
“Standing back,” tweeted Financial Times columnist John Authers, “[the] unemployment rate [is] down to its lowest since 2000, while profits [for S&P 500 companies] are up 25.7% year-on-year.”
 
Authers last week called the first quarter’s corporate US earnings “superb and far ahead of the most optimistic expectations.”
 
“And [yet] wage growth is no higher than it was before. Very, very strange combination.”
 
Average US wages grew 2.6% in the year to April, the Bureau of Labor Statistics said Friday, only just ahead of March’s inflation rate of 2.4%.
 
Since official unemployment in the US was last this low, the gold price in Dollars has quadrupled.
 
Chart of gold priced in Dollars (year-on-year percentage gain) vs. US jobless rate. Source: St.Louis Fed
 
Priced in Dollars gold on Friday headed for its lowest weekly finish of 2018 to date as New York opened for business, trading at $1309 per ounce.
 
Euro and UK Pound gold prices in contrast added 0.6% and 0.8% respectively for the week, nearing their highest Friday finishs since early and mid-January.
 
“The Dollar’s surge is occupying investor attentions,” says the latest Global Strategy Weekly from ‘perma-bear’ Albert Edwards at French investment bank Societe Generale.
 
This week’s rise in the Dollar’s FX value, says Edwards, comes because US interest rates are rising further above the return offered by other currencies. Speculators also held “extreme bearish” bets against the Dollar, making it “vulnerable to a reversal.
 
“GDP growth surprises in favour of the Eurozone [are also] abating.”
 
“Overhanging all of this is how President Trump and the US authorities will react to the stronger Dollar,” says Edwards, warning of “aggressive verbal intervention quite soon” if the Dollar continues to gain.
 
“No-one wants an excessively strong currency” because of its dent to exports and boost to imports.
 
Chinese Yuan prices held little changed this week, but the premium for wholesale bars delivered in the world’s No.1 consumer nation rose Friday towards $11 per ounce above London quotes, one-fifth greater than the typical incentive for new imports.
 
“Bullion price action during Asian trade on Friday was relatively subdued,” says a trading note from Swiss refiners and finance group MKS Pamp.
 
“Shanghai interest once again provided a modest bid tone for the metal.”
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