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GLD Traders Late Again as Gold Bullion 'Finds Support' at 100-DMA, Catalan Leaders Defy King After 'Illegal' Vote

October 4, 2017
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GOLD BULLION recovered this week’s previous 0.9% loss to 7-week lows in Asian and London trade on Wednesday, touching $1281 per ounce as world stock markets stalled at record highs and bond yields retreated from the last month’s jump.
 
The US Dollar slipped further from yesterday’s 7-week highs against the Euro while Germany’s Xetra Dax touched a new all-time record high.
 
Spain’s Ibex 35 index sank another 2% however as Madrid’s bond prices fell – driving borrowing costs to a 7-month high – after Catalonia’s governor Carles Puigdemont said he may ask the regional parliament in Barcelona to declare independence next Monday following the 90% ‘yes’ vote in last weekend’s referendum.
 
Declared illegal by Spain’s courts and marred by violent police action at polling stations, the ballot achieved a 40% turnout.
 
“[Catalonia’s leaders] have placed themselves totally outside the law and democracy,” said King Felipe VI in a rare televised announcement, saying that “legitimate state powers [should] ensure constitutional order.”
 
“In our view gold is likely to remain in demand…on the back of [such] political uncertainties in Europe,” says the latest commodities note from German financial services group Commerzbank.
 
“Trading [today] leaves gold above the 100-day moving average, which appears to be lending support to the price.”
 
Gold investment demand retreated Tuesday however, with the giant bullion-backed SPDR Gold Trust (NYSEArca:GLD) shrinking for the second day in succession.
 
Since the GLD last saw investor selling – back in the first week of September – the gold price had lost $75 per ounce by yesterday afternoon.
 
Prior to that move, gold gained $45 per ounce from early July’s 4-month lows before the GLD found new net demand from investors.
 
Chart of SPDR Gold Trust (NYSEArca:GLD) bullion backing. Source: BullionVault via ExchangeTradedGold
 
Tuesday’s “generally muted session” saw gold prices recover as the Dollar eased back, says Swiss refining and finance group MKS, “[to] end importantly around the 100-day moving average at 
$1272.50″ per ounce.
 
“The yellow metal looks to be settling in for a period of consolidation around current levels…due to [this week’s] Chinese holiday period. Short-term key support remains the 100-DMA pivot point.”
 
“Gold has achieved our target of $1268/1263,” says a technical analysis from French investment and bullion market-making bank Societe Generale, “corresponding to the 100 DMA, the 38.2% [Fibonacci] retracement from December and the 61.8% retracement from July.”
 
“Daily indicators are now near a floor denoting a corrective recovery can’t be ruled out…[but] $1295/1300 will be a near-term resistance.”
 
With Spain’s 2018 government budget now likely delayed, “the minority government [of Mariano Rajoy] has depended on the support of the Basque Nationalist Party for support in [the Madrid] parliament,” reports the Financial Times, “and [the Catalonian crisis] could make it even more difficult for the PNV to lend its support to the government’s legislative initiatives in the future.”

Gold's Dollar Link Strongest in 2 Years Amid 'Warsh Fed' Talk, Investing via GLD Shrinks 1st Time Since Sept' Peak

October 3, 2017
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GOLD INVESTING prices fell to new 7-week lows against a rising Dollar on Tuesday in London but held little changed against other major currencies as world stock markets rose and debate raged over who US President Trump will appoint as chair of the Federal Reserve.
 
Asian equities (ex-China, shut all week for National Day) gained after New York’s S&P index set a third record-high close in succession overnight.
 
European stocks also edged higher, but Spain’s Ibex 35 fell for a second day amid a general strike in breakaway region Catalonia after the 90% ‘yes’ vote by 2.2 million people in Sunday’s illegal independence referendumin saw 900 injured by police.
 
Government bond prices meantime fell once again, pushing the annual yield offered by 10-year German Bunds up towards 3-month highs at 0.48%.
 
Ten-year US Treasury yields ended Monday at 2.35%, the highest investing return offered since mid-July.
 
Touching $1268 in spot trade this morning – the lowest price since mid-August – gold fixed at London’s AM benchmarking at $1270.70 per ounce, but was hardly moved in Euro or Sterling or Yen terms.
 
More than 5.9% below the 12-month high hit 3 weeks ago, the gold price in Dollars has now fallen at its fastest pace since last December.
 
Chart of gold priced in Dollars vs. US Dollar's broad trade-weighted index against other currencies. Source: St.Louis Fed
 
September saw the gold price move more in opposition to the Dollar’s broad exchange-rate value than any time since August 2015.
 
On a rolling 1-month basis, the metal showed an average daily correlation last month of -0.87 with the broad trade-weighted USD index.
 
The most negative reading in more than 2 years, that compares with an average reading of -0.45 across both the last decade and since 1997.
 
“If, as we suspect, [Donald Trump] reappoints Yellen it might take a bit of the recent shine off the Dollar,” says Chinese bullion bank ICBC Standard’s FX strategist Steven Barrow.
 
“[But] as we have said for some time, it is likely to be fiscal policy that sets the tone for the Dollar going forward, not monetary policy…[and] we see this recent rise as nothing more than a short-term deviation from the longer-term downtrend.”
 
“The Yellen Fed has lost its way and current policy is deeply flawed,” writes French investment bank strategist Albert Edwards, paraphrasing US central-bank candidate Kevin Warsh, speaking at an event last week.
 
“[Warsh] got a rousing reception from the audience as he talked a lot of sense…In particular Warsh warned that the Fed had become the slave of the S&P.”
 
Apparently interviewed by Donald Trump along with 3 other candidates at the White House last week, former Fed governor Warsh is now ahead of incumbent chair Janet Yellen in the betting for who will take the top post next February.
 
Trump praised Yellen’s track record as recently as late July, calling her “a low interest-rate person“.
 
Gold investing exposure through the metal-backed SPDR Gold Trust (NYSEArca:GLD) shrank 0.6% on Monday as bullion prices fell $10 per ounce, leading the trust to cut 5 tonnes of gold from last week’s 3-month high of 864 tonnes.
 
That was the first time the GLD shrank since bullion prices peaked back on 8 September.

Gold Buying Rises with Price 1st Time in a Year

October 3, 2017
Latest News
Gold Investor Index snaps 2017 pattern of buying and selling…
 

The NUMBER of private investors buying gold rose sharply in September even as prices recorded their highest monthly average in a year, writes Adrian Ash at BullionVault.
 
This breaks 2017’s previous pattern, when gold investing sentiment moved inversely to the metal’s month-average Dollar cost and higher prices deterred new buying.
 
While falling sharply from 8 September’s 1-year high to end last week at $1283, gold prices averaged $1314 across the month, rising 14% from the end of 2016 and 23% above the 6-year low hit at the end of 2015.
 
The number of people buying gold grew however on BullionVault – the world’s largest online market for physical precious metals – expanding by 21.5% from August to reach the second-highest monthly total so far in 2017.
 
The number of sellers meantime retreated by 29.5% having almost doubled on August’s price rise to reach the largest number since July 2016. 
 
Altogether this saw the Gold Investor Index – a unique measure of sentiment built from the buying and selling decisions of thousands of private investors – rise in September to read 54.5 from the 14-month low of 51.6 hit in August.
 
Chart of the Gold Investor Index, 3 years to September 2017. Source: BullionVault
 
Last month marked the first time since August 2016 that the Gold Investor Index rose alongside month-average gold prices, and the first time the two moved together since last December’s drop.
 
Silver sentiment also rose with month-average prices in September, again breaking the previous 2017 pattern and recovering from August’s 6-month low as buying grew.
 
The number of people selling silver fell 16.1% last month while those starting or adding to their silver holdings grew 17.3% from August’s two-year low. 
 
That took the Silver Investor Index up from 50.4 to 52.3 as Dollar prices averaged a 3.2% rose at $17.45 per ounce.
 
Chart of the Gold Investor Index, 3 years to September 2017. Source: BullionVault
 
By weight however, total client silver holdings ended last month unchanged at August’s new record high above 689 tonnes.
 
Gold holdings meantime shrank for the second month running, falling by 43kg to 37.7 tonnes after setting a new record above 38.1 tonnes in July.
 
That liquidation contrasts with the greater count of individuals choosing to buy gold in September, and reflects selling by a small number of larger investors. It’s against such measures of weight that the Gold and Silver Investor series really offer insight, showing revealed preference – not survey-based ‘intentions’ – amongst the world’s largest single pool of self-directed bullion investors.
 
Trading live online for instant settlement of physical metal in London, New York, Singapore, Toronto or Zurich, BullionVault users today own $1.6 billion worth of gold bullion between them (£1.2bn, €1.3bn, ¥175bn) – more than is held by most of the world’s central banks – plus a further $374m (£279m, €316m, ¥42bn) in physical silver and $8m (£6m, €7m, ¥900m) of physical platinum, added to BullionVault’s online order board in March 2017 in partnership with the mining-backed World Platinum Investment Council.
 
All told, September’s solid upturn in gold buying and silver investing sentiment matches the steady consolidation in prices after last year’s Brexit and then US election volatility.
 
But long-term bull markets need to keep finding buyers as prices rise. And 2017’s earlier pattern of bargain-hunt buying followed by quick profit-taking in may not be finished yet in precious metals.

Gold Price Hits 6-Week Dollar Low as Euro Falls After Catalonia Vote, Comex Speculators Pull Back

October 3, 2017
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GOLD PRICES fell to new 6-week lows in London trade Monday as the Dollar rose and world stock markets edged higher.
 
The Euro slipped after Sunday’s clashes with civil police in Spain’s Catalonia region as people voted for independence in what the national government called an illegal ballot.
 
“With this day of hope and suffering,” said regional president Carles Puigdemont in Barcelona, “the citizens of Catalonia have won the right to an independent state in the form of a republic.”
 
Gold priced in the Euro meantime crept back up to €1085 per ounce as the single currency slipped on the FX market, unwinding last week’s €2 drop but holding 4% below early September’s 4-month high.
 
“The prospects of further monetary tightening in developed economies have started to weigh on the price of gold,” says a note from head of precious metals sales Tom Kendall at Chinese-owned bullion bank ICBC Standard, pointing to the Fed and ECB discussing balance-sheet reduction while the Bank of England’s “hints” at UK rate rises.
 
Whilst gold-backed ETF trust funds expanded slightly amid gold’s 1.5% price drop last week, latest data from the Comex gold futures and options market show professional money managers cutting their bullish bets on the metal’s price to a 5-week low, while bearish bets grew to a 7-week high.
 
Overall that trimmed the net speculative position for the second week running, down to the notional equivalent of 708 tonnes – some 50% greater than its historic average.
 
Chart of Comex managed money bull vs bear position in gold futures and options. Source: BullionVault via CFTC
 
Comex silver contracts also saw money managers cut their overall bullish stance last week, but it held 86% greater than its historic average.
 
Silver prices today touched the lowest Dollar level in 8 weeks at $16.56 per ounce, before popping back above last Friday’s finish to reach $16.70.
 
Looking at gold, “the Indian implementation of a Goods and Services Tax and the extension of anti-money laundering legislation…are causing yet more disruption to this key source of bullion demand,” says Kendall at ICBC.
 
Now entering the key autumn festive period, gold buyers in India are adapting to new AML rules by sidestepping them, the Business Standard reports, with purchases recorded as conversions of pre-existing jewelry, a longstanding and common service across the world’s No.2 consumer market.
 
Wholesale markets in No.1 consumer China are now shut meantime for this week’s National Day holidays.
 
“Liquidity noticeably down,” says a trading note from Swiss refining and finance group MKS, and “given the absence of China today – usually buyers on dips – there was little in the way of support for gold.”
 
But looking ahead, Kendall concludes, “Political divisions [in the US] and the tail risk of a sharply rising US deficit in years ahead, combined with the ongoing geopolitical tensions in Asia, suggest that the downside to gold from here is limited.”
 
With votes from 42% of Catalonia’s  5-million registered electorate now counted, 90% said “Yes” to independence, the Generalitat government of Catalonia declared overnight.
 
“It’s time for mediation,” said president of the Generalitat Carles Puigdemont, “and mediation must be international in order to be effective.”
 
Spanish bond prices fell Monday, pushing 10-year yields up towards 3-month highs near 1.70% per year, while all but 4 of the companies in Spain’s Ibex 35 stock index fell.
 
That pulled Madrid’s main index 1.7% down for the day, holding it over 8% below May’s 2-year high.

Wholesale Gold Bars Recover Half Week's Drop as China's Bank Funding Queried, UK Deficit Widens

September 29, 2017
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GOLD BARS traded in London’s wholesale market rose back to $1287 per ounce on Friday, halving the week’s previous $20 loss as global stock markets rose within 0.5% of last week’s new all-time high on the MSCI World Index.
 
Major government bond prices rallied, easing longer-term interest rates lower from this week’s jump, as commodities held flat overall.
 
Silver traded 10 cents above its 6-week low of Thursday at $16.70 per ounce, while platinum held 1.5% lower from last Friday at $919 per ounce.
 
The Euro rose versus the Dollar but the British Pound fall back towards yesterday’s 2-week lows as new data cut the UK’s second-quarter GDP growth to a 4-year low of 1.5% per annum and raised the country’s current account deficit with the rest of the world to 4.6% of economic output.
 
Separate data said London house prices fell year-over-year in September for the first time since the financial crisis of 2009 after national mortgage lending shrank but consumer borrowing grew faster.
 
Calling the Bank of England’s oversight of financial stability “incredibly well designed”, central bank governor Mark Carney today said UK banks have “not been as disciplined as they should be” in making consumer loans, while predicting an interest-rate rise from the current all-time low of 0.25% “in the relatively near term if the economy continues on the track that it’s been on.”
 
“An important lesson of the US subprime mortgage crisis was financial institutions lent excessively to people who were incapable of paying back the loans,” said Beijing’s chief financial regulator Xiao Yuanqi of the China Banking Regulatory Commission (CBRC) today.
 
Now the world’s largest gold-mining and consumer nation, “China must prevent this tendency,” Xiao said, launching an investigation into consumer loans being “misused…to fuel property bubbles.”
 
After credit-ratings agency S&P downgraded China’s sovereign bonds because of the country’s debt growth, competitor agency Fitch this week reported that money-market loans and ‘wealth management products’ hiding off-balancesheet are being used to fill the gap between bank lending and customer deposits.
 
Compared with 70% in 2013 and 78% in 2008, “Customer deposits accounted for 61% of total equity and liabilities” at the end of July said Fitch, counting WMPs as contingent liabilities for China’s banks.
Chinese banks' funding H1 2017. Source: Fitch
The Chinese Yuan had its strongest quarterly rise since 2011 between July and end-September, but retreated Friday to a new 6-week low as China’s financial markets closed for next week’s National Day holidays.
 
That cut the Dollar-equivalent premium for gold delivered in Shanghai to $8.40 above London quotes, back below its historic average of $9 per ounce.
 
Wholesale gold prices in No.2 consumer nation India meantime held at a small discount to London bullion bars as retailers continued to report poor gold sales in this key autumnal festive season thanks to confusion over new anti-money laundering rules.
 
“There is a pressing need to reform the gold-trading market in India,” said mining-backed market development organization the World Gold Council this week, launching its “vision for a gold spot exchange and its associated ecosystem” of refining, vaulting and financial infrastructure similar to China’s government-mandated Shanghai Gold Exchange.
 
“These challenges include lack of quality assurance, weak price transparency and fragmented liquidity and regulatory issues,” said the WGC.
 
Recommending official standards for gold bar sizes and fineness, trading contracts and delivery locations, its report doesn’t highlight India or China’s ban on gold bullion exports.

Gold Price Down Again Amid US Rate-Rise Bets, Strong China Trading, Pall-Plat Parity

September 28, 2017
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GOLD PRICES fell beneath yesterday’s 1-month lows in London trade Thursday, dipping to $1278 per ounce as most commodities edged higher with world stock markets.
 
With gold prices now falling almost 6% from early September’s 12-month Dollar high, silver today fell to $16.70 per ounce – down more than 8% from 3 weeks ago.
 
Platinum meantime dropped to 9-week lows beneath $920, trading below sister-metal palladium for the first time in 16 years.
 
Following Janet Yellen’s comments from Tuesday on needing to tighten US policy sooner than expected, US Treasury bond prices also fell again, driving the interest rate offered to investors by 10-year notes up to 2.34%, the most since 11 July.
 
Gold was then trading at $1211 per ounce.
 
Betting on US interest rates now see a 76% chance of the Fed raising at its December meeting, up from just 33% one month ago.
 
“Gold is easing back towards the recent low at $1275.69,” says technical analyst Karen Jones at German financial services group Commerzbank, calling this month’s drop a ‘correction’.
 
“We should see the market attempt to stabilise between here and the 200-day moving average at $1247.65.”
 
Chart of gold price in Dollars + 200-day moving average. Source: BullionVault via LBMA
 
With China’s ‘golden week’ holidays to mark National Day not in fact beginning until Saturday, bullion delivered via the Shanghai Gold Exchange today slipped only 0.7% against the Yuan, while Dollar spot prices fell 1.1% from early Wednesday.
 
That buoyed the Shanghai premium, over and above quotes for London settlement, just above its typical $9 per ounce average.
 
Trading in Shanghai’s main spot gold contract was meantime one-third greater today than August’s average daily volume in Yuan terms, and 16% larger than 2017’s daily average to date.
 
Looking at imports to the world’s No.1 consumer nation, “Data have confirmed…weak gold demand in China,” said a note earlier this week from Commerzbank’s commodities team, with August’s imports to the mainland from Hong Kong the lowest since January.
 
“At 485 tonnes, net imports [from Hong Kong] in the first eight months of the year were 70 tonnes down on the same period last year,” says Commerzbank, while “direct gold imports from [global refining center] Switzerland were already weak in August.”
 
Swiss export data show direct exports to mainland China outpacing shipments via Hong Kong however, accounting for 55% of the 366 tonnes sent to China and Hong Kong combined so far in 2017.
 
In other markets, the Euro on Thursday bounced from 5-week low against the Dollar – driving the gold price for German, French and other Eurozone investors back down to €1090 – while the British Pound recovered from 2-week lows.
 
London’s FTSE100 was the only major European stock index to fall, however, as UK Prime Minister Theresa May gave what journalists called “a defence of capitalism” in a speech at the Bank of England, widely cast as a response to this week’s socialist Labour Party conference in Brighton.
 
Rising in contrast to the other precious metals meantime, “Palladium has the wind in its sails” says Japanese conglomerate Mitsubishi analyst Jonathan Butler, pointing to “investor interest…a good amount of speculative activity…physical demand in Greater China [and] all the news we’ve been hearing about the electrification of vehicles [which] implies more gasoline hybrid vehicles.”
 
Primarily used in diesel-engine catalysts, the price of platinum has now retreated to its lowest price since mid-July in Dollar terms and a 19-month low against the Euro.

Fed's 'Imprudent, Misguided' Yellen Knocks Gold Bullion to 5-Week Low as Chinese Jewelry Demand Falls

September 27, 2017
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GOLD BULLION prices sank against a surging US Dollar on Wednesday in London, trading down towards 5-week lows beneath $1285 per ounce after Federal Reserve boss Janet Yellen said strong jobs data make raising rates more urgent.
 
The Dollar jumped to its highest level versus the single-currency Euro since mid-August at $1.17, and reached mid-July levels against the Japanese Yen at ¥113.
 
Global stock markets edged higher but major bond prices fell, driving up the yield offered by 10-year US Treasurys 0.07 points to 2.30% – the highest level since late July.
 
“A gradual approach is particularly appropriate in light of subdued inflation,” said the Fed chair in a speech in Cleveland, “[because] the FOMC will have only limited scope to cut the federal funds rate should the economy be hit with an adverse shock.
 
“But we should also be wary of moving too gradually…My colleagues and I may have misjudged the strength of the labor market.
 
“It would be imprudent to keep monetary policy on hold until inflation is back to [the annual target of] 2%.”
 
Gold prices today erased this week’s earlier jump in Sterling, Yen and Swiss Franc terms.
 
Priced in the Euro, gold bullion halved its 2.1% gains from last Friday at €1095 per ounce.
 
With global quotes for London gold dropping $15 per ounce this morning from early Tuesday, today’s benchmarking at the Shanghai Gold Exchange held almost $10 above equivalent Dollar spot prices.
 
Back in line with typical averages, that premium on bullion delivered in China offered the largest incentive to new imports to the world’s No.1 consumer nation since gold’s 4-month Dollar lows of early July.
 
Chinese gold jewelry demand – the world’s largest since overtaking India in 2013 – fell another 3.6% by weight year-on-year during the first half of 2017, says the latest weekly note from specialist analysts Metals Focus, extending the 16% drop of 2016.
 
“Structural changes [driven by] new consumer trends stand out” as a cause, says the consultancy, most notably as “traditional [24-carat] chuk kam jewellery, which dominates the retail landscape, has lost market share to products that carry a far higher design component.”
 
Chart of China's gold jewelry demand. Source: BullionVault via World Gold Council via Metals Focus
 
This month’s key trade fairs in Hong Kong and Shenzhen confirmed the trend, Metals Focus says, because – amid “sentiment far more positive than in recent years [and] visitor numbers considerably higher” – “we saw considerable interest in pearls and coloured stones…[matching] market-share gains by gem-set and 18-carat products.”
 
Online and smartphone marketing campaigns were “another feature” of China’s big jewelry trade shows, the report adds, “especially in utilising [social media app] We-Chat to create ‘Moments’ adverts [for] a given location [and] a particular jewelry store.”
 
Meantime in India, where new tax I.D. reporting rules are blamed for gold sales halving during the current autumnal festive season from typical levels, gold smuggling and illegal ‘grey market’ sales are likely rising as a result according to industry insiders.
 
“The government implemented the [new anti-money laundering] rule but it didn’t take efforts to popularise” information about the lower limit for unreported transactions, the Economic Times quotes Surendra Mehta of the India Bullion and Jewellers Association.
 
“Customers are hesitating in giving necessary details [and so] unaccounted sales will rise in the festive season as some customers are trying to buy without bills.”

Gold Prices Slip Back Near $1300 After Comex Options Surge on N.Korea 'War' Talk

September 26, 2017
Latest News
GOLD PRICES this morning cut yesterday’s sharp $15 gain following North Korea’s accusation that the US has “declared war”, falling back to $1302 per ounce in Tuesday’s London trade as the Dollar rose and world stock markets held flat overall.
 
Gold priced in the single-currency Euro pushed higher again following the weekend’s German elections, reversing all of last week’s 1.9% loss to trade back at €1105 per ounce.
 
“When Trump said this weekend that our country wouldn’t be around much longer, he at last declared on our country,” declared Ri Yong Ho, the DPRK’s foreign minister, to reporters in New York on Monday.
 
With gold prices jumping back above $1300 per ounce for the first time since Wednesday, “We [therefore] have the right to take counter-measures,” Ri went on, “including the right to shoot down the United States’ strategic bombers even when they are not yet inside our airspace borders.”
 
Despite the tensions however, the world’s largest bullion-backed trust fund, the SPDR Gold Trust (NYSEArca:GLD), failed to expand on Monday despite trading volume jumping 36% compared with its 12-month average on the New York Stock Exchange.
 
Chart of SPDR Gold Trust (NYSEArca:GLD) bullion backing in tonnes vs. gold price in Dollars. Source: BullionVault via ExchangeTradedGold.com
 
On a rolling 1-month basis, the correlation of bullion prices with the size of the GLD yesterday turned negative for the first time since gold rose but the ETF shrank in late July and August, dropping to -0.18.
 
That figure would read +1.0 if gold prices and the GLD’s size moved perfectly together. It has read above +0.42 half of the time since the exchange-traded gold fund launched in late 2004.
 
The number of outstanding Comex gold futures contracts rose in contrast on Monday, expanding 1.3% on Monday as trading leapt 42% from Friday’s 1-month low according to data from the CME Group.
 
Trading volumes in yet-more highly leveraged Comex gold options meantime leapt 130% from the previous week’s average, hitting the highest level of September so far with open interest growing fastest in November calls, which expanded by almost 1-in-10.
 
“Many investors view gold as a haven amid [these] ongoing political and economic risks,” says Japanese conglomerate Mitsubishi’s Jonathan Butler, “and need to hedge excessive equity market length.
 
“Domestically, the Trump administration’s attempts to reform the US tax system and provide fiscal stimulus [may also] see a protracted and potentially damaging set of negotiations that could help support gold.”
 
Over in India meantime, the Hindu calendar’s current 9-day festival of Navratri has seen gold demand from households in Mumbai fall just to half expected levels, according to city dealers.
 
Nationwide, retailers are blaming new ‘know your client’ rules on customer I.D. and tax reporting for India’s gold buying sinking from the typical autumn festival levels.
 
“Many people fear harassment from Income Tax officials if they have to disclose these purchases,” says Kumar Jain, vice president of the Mumbai Jewellers Association.
 
“In addition, the majority of [festive] purchasers are women who save money over a period, and are not comfortable with KYC rules.”
 
India’s main stock indices closed lower for the 8th day running on Tuesday.
 
Overall however, Asian stock markets held more than 5% higher from the start of July, when Pyongyang first tested a missile it claimed could reach “anywhere in the world”.

Gold Prices Fall after Merkel's Re-Election in German Election

September 26, 2017
Latest News
GOLD PRICES eased back on Monday in London but stayed above last week’s near 4-week low after Angela Merkel won the general election in Germany, writes Steffen Grosshauser at BullionVault.
 
The US Dollar rose and the Euro fell however after the right-wing Alternative for Germany (AfD) party won 1-in-8 votes in the German elections.
 
With Dollar gold prices slipping back towards $1291 per ounce, that pushed gold in Euro terms back up to €1090, some €10 above Friday’s 1-month low.
 
While Angela Merkel managed to secure her fourth term as Chancellor in Sunday’s election, her conservative CDU/CSU bloc saw its lowest support in almost 70 years.
 
“With the German, French and Dutch elections now complete, the political risk from Euro-sceptic parties – one of the main concerns of 2017 – is now largely alleviated,” said Peter Wilmshurst at US investment firm Franklin Templeton. 
 
Speculative investors in US Comex futures and options had already reduced their net long positions in gold for the first time in ten weeks in the week to 19 September, according to the latest data by US regulator the Commodity & Futures Trading Commission (CFTC).
 
The positions were reduced by more than 8% to 754 tonnes after reaching a 1-year high in the previous week.
 
The net long positions of silver were also down by 10% after eight weeks of continuous growth. 
 
Chart of Comex futures and options' Managed Money category speculative long vs. short positions. Source: BullionVault via CFTC
 
Winning its first-ever parliamentary seats, the anti-immigration, anti-Islam AfD vowed to fight “invasion of foreigners” following Merkel’s 2015 decision to welcome around 1 million refugees and migrants primarily from the conflict in Syria.
 
Merkel now faces potentially complex coalition negotiations as her current coalition partners, the Social Democrats (SPD), announced they would go into opposition.  
 
“Merkel’s win in the German federal elections and a quiet news weekend on the North Korean front, saw the US Dollar opening stronger and gold’s weekend safe-haven premium eroded from Friday,” reckons Jeffrey Halley, senior market analyst at spread-betting platform Oanda.
 
After last week’s Federal Reserve meeting caught traders off-guard by confirming the central bank will trim its $4.5 trillion balance sheet starting next month and by signalling a further rate hike before the end of the year, committee members William Dudley, Charles Evans and Neel Kashkari were all due to speak later today.
 
Fed expectations are “[having] a strong influence in pushing gold prices lower as well,” says Singapore-listed bank OCBC’s analyst Barnabas Gan.  
 
“A year from now, gold will be demonstrably higher than it is right now,” said commodities expert Dennis Gartman, founder and publisher of trading advisory The Gartman Letter, in an interview with CNBC’s Futures Now.
 
“I would certainly think we could see $1400 [per ounce] in Dollar terms…[This is] only a correction.”
 
In contrast to futures and options speculation, investor interest in the largest gold ETF, the SPDR Gold Trust (NYSEArca:GLD), increased last week, raising the quantity of bullion needed to back the fund by 17.4 tonnes to a 3-month high at 856 tonnes.

Gold Bullion Fails to Recover $1300 Even as Dollar Retreats Post-Fed, Kim + Trump Trade Insults

September 22, 2017
Latest News
GOLD BULLION rallied almost $10 per ounce on Friday from yesterday’s 4-week lows against the Dollar, but failed to recover what analysts called the “key pivot” of $1300 despite claims of safe-haven buying after Pyongyang threatened to test a nuclear bomb over the Pacific Ocean.
 
The Yen rose faster versus the Dollar, erasing last week’s 0.7% gain in gold for Japanese investors, as Kim Jong-un – leader of the regime in neighboring North Korea – called US President Trump “deranged”, and Trump called Kim a “madman”.
 
“Chinese interest was once again prevalent to underpin the early session bid,” says one Asian bullion desk.
 
Ratings agency S&P today downgraded China‘s sovereign debt one notch to A+, saying that credit growth remains strong and “deleveraging is likely to be [too] gradual.”
 
This was the “wrong decision” Beijing’s Finance Ministry replied.
 
Chinese gold premiums, over and above the global reference rate of London prices, held Friday at $7 per ounce, still below the typical incentive for new imports of $9-10 per ounce.
 
After India’s gold bullion imports tripled from a year ago to $15 billion-worth in April-August, “We don’t favour a blanket restriction on gold imports,” the Economic Times today quotes a Commerce Department official, “[because] it may involve disputes in the World Trade Organisation.” 
 
India’s household gold demand is meantime estimated at half the usual level ahead of next month’s key Diwali festival thanks to changes in tax reporting rules scaring away consumers.
 
“The [US Fed this week] delivered a more hawkish message than anticipated,” says a new note from Chinese-owned bullion bank ICBC Standard, leaving scope for gold prices to fall further because “to date the reduction in [bullish] investor positioning has been limited.”
 
Despite making no change to policy on Wednesday, the Federal Reserve’s accompanying comments have now seen betting on it holding or raising US rates at the December decision more than reverse since gold prices hit 12-month highs in early September.
 
The likelihood of a hike to a ceiling of 1.50% has now doubled to better than 3-in-4 from just a month ago, according to analysis by futures exchange the CME Group.
 
Chart of US Fed decision odds derived from betting on December interest-rate futures. Source: CME FedWatch tool
 
Holding the Chinese Yuan down near 3-week lows however, the Dollar today gave back this week’s earlier gains versus the Euro.
 
The single-currency zone’s main stockmarkets held 0.7% higher from last Friday, while gold priced in Euros flirted with 6-week lows near €1080 per ounce.
 
“We have heard the French people,” said Front National party leader Marine Le Pen in a radio interview this morning, confirming that quitting the 19-nation Euro currency union is no longer a “priority” followin her defeat in this spring’s presidential election, when the FN also secured just 8 seats out of 577 in the National Assembly.
 
The British Pound today also recovered its mid-week drop versus the Dollar, peaking near $1.36 – the post-Brexit high now touched 3 times so far this month – ahead of Prime Minister Theresa May giving a speech in Italy aiming to “reboot” exit negotiations with the UK’s current European Union partners.
 
That rise in Sterling saw the UK gold price in Pounds per ounce set new 7-week lows at £950, down £85 – some 8% – from the 10-month high reached at the start of September.
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