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US Gold Investing Sinks 92%, Euro Price Hits 16-Month Low Amid Stock Market's 'Daily Bull Market'

July 3, 2017
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GOLD INVESTING prices slipped towards 8-week lows against a rallying US Dollar as Monday brought a start to the second half of 2017, while world stock markets rose and crude oil extended its recovery ahead of tomorrow’s Fourth of July holiday, writes Steffen Grosshauser at BullionVault.
 
With gold dropping to $1226 per ounce, silver and platinum also reached their lowest Dollar values since early May at $16.29 and $908 per ounce respectively.
 
The US Dollar Index bounced against a basket of other major currencies but stayed close to a 9-month low after new data said activity in the 19-nation Eurozone’s manufacturing sector accelerated to a 6-year high last month.
 
European stocks advanced for the first time in five days and Asian stocks started the new month close to 2-year highs.
 
Investing in gold for Euro citizens fell to its cheapest since March 2016 beneath €1080 per ounce.
 
Oil prices meantime rose for the eight straight day – their longest rally since February 2012 – on what analysts called “tightening” supply amid the Opec oil cartel’s agreement on output caps.
 
“The safe-haven buying that had pushed gold to an eight-month high earlier [last] month has slowly petered out, with risk-appetite improving in recent days,” according to a note from Australia’s ANZ Bank.
 
For equities in contrast, “Every day seems like a bull market,” says Terence Hanlon, president of Dallas-based precious metals wholesalers Dillon Gage. 
 
While the S&P500 index gained 8.2% in the first half of 2017, gold priced in Dollars gained 8.4%.
 
Chart of semi-annual percent change in Dollar gold price vs. S&P500 index. Source: St.Louis Fed
 
Retailer demand for American Eagle gold coins fell in January to June 2017 to record the weakest first-half investing total since 2007, sales data from the US Mint show.
 
This year’s sales to date fell 92% from the same period last year, when concerns over China’s growth were followed by the UK’s shock Brexit referendum vote.
 
Competitor coin and bar producer the Perth Mint in Western Australia said today its sales of retail gold-investment products fell 35% last month from May, also pulling down the year-on-year comparison.
 
Chinese gold prices fell overnight to their lowest Yuan value since mid-March, but their premium over comparable quotes in London – heart of the world’s wholesale bullion trade – held near $10 per ounce, just above the typical incentive to new imports into the world’s No.1 consumer nation.
 
World No.2 India saw gold imports through the key hub of Ahmedabad sink 60% last month from May, the Times of India reports, as dealers enjoyed a surge in demand but stopped stockpiling ahead of last weekend’s imposition of 3% GST sales tax, now widely expected to temper household purchases already weakened by the seasonal summer lull in Hindu wedding and festival dates.
 
The new rules – now applied to goods and services across the world’s second most populous nation – risk distorting India’s gold market, the Association of Gold Refineries & Mints (AGRM) warns, because the 3% General Sales Tax introduces a “huge pricing disadvantage” for its members working outside the country’s excise-free enterprise zones.

Gold Bullion Ends June at January Low vs Falling Dollar, 'Supportive' Asian Demand 'Will Weaken'

June 30, 2017
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GOLD BULLION slipped again overnight Friday against a falling US Dollar, heading for the lowest monthly finish since January in London’s wholesale trade while world stock markets rallied from yesterday’s sell-off and bond prices also stabilized.
 
Commodities extended their bounce in Dollar terms, taking Brent crude oil further above $47 per barrel – some 6% above mid-June’s 7-month low – but silver and platinum prices held lower for the week and the month with gold.
 
Losing 1.9% from end-May at $1243 per ounce for US Dollar investors, gold bullion has fallen hardest versus the single-currency Euro, dropping 3.3% across June to trade below €1090 per ounce on Friday.
 
The Dollar has now lost 7.1% of its value since New Year against the world’s other leading currencies.
 
Gold has gained 8.0% versus the greenback, but only 3.3% against the Japanese Yen and 2.8% against the British Pound.
 
Priced in Euros, gold bullion has slipped 0.5% since the start of January.
 
Chart of gold price in US Dollars (red) vs. gold price deflated by Dollar's broad trade-weighted FX index (blue), rebased to market peak of 6 September 2011. Source: BullionVault via St.Louis Fed
 
“Typically, a weaker Dollar should provide gold with something of a tailwind,” says brokerage INTL FCStone’s analyst Edward Meir, but “[bond] yields on both sides of the Atlantic are pushing higher,” making gold less appealing against income-paying assets.
 
“We expect higher US real rates and Fed balance sheet reduction to put downward pressure on gold,” agrees analysis from commodities specialist Jeff Currie at investment bank and bullion market-maker Goldman Sachs, but weak US and global growth, plus emerging-market demand could “[make] gold more attractive to longer-term investors.”
 
Gold bullion imports to No.2 consumer India are “on course to slow down from July” says a note from analysts Metals Focus as this weekend’s introduction of 3% GST sales tax dents seasonally weak summer demand.
 
Further ahead in Indian jewelry, says rating agency S&P’s Crisil analysis company in Mumbai, “Better supply-chain efficiencies and transparency will provide an edge to the organised players and help them gain market share” from the country’s primarily ‘artisanal’ workshops.
 
Shanghai gold prices meantime fell hard Friday morning, down to their lowest level since mid-March at ¥273 per gram as the Yuan rose yet again to set a new 7-month high at ¥6.76 to the Dollar.
 
That trimmed the incentive offered to new imports of bullion, out of London and into the world’s No.1 consumer market, back below $10 per ounce.
 
In line with the typical Shanghai premium, that was down almost $2 from Thursday’s 5-week high.

'Sell Rallies in Gold' Says SocGen as Price Drops vs Falling Dollar, China + India Premiums Rise

June 29, 2017
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GOLD PRICES fell against a falling US Dollar on Thursday, dropping below $1245 per ounce for the third time in 2 weeks even as the greenback hit new 13-month lows versus the Euro on the currency market.
 
The Euro gold price per kilo fell near €35,000 – the lowest since December at what were 19-month highs when reached on the sudden end of Switzerland’s peg to the single currency in early 2015.
 
Chart of Euro gold price, last 5 years. Source: BullionVault
Raw materials prices rose across the board, with only cotton falling amongst major tradable commodities alongside precious metals according to Bloomberg data.
 
Both silver and platinum lost 0.9%, with the cheaper metal retreating from a new 2-week high at $16.90 per ounce.
 
Platinum prices fell back towards Monday’s 7-week lows, dipping beneath $917 per ounce.
 
“Central bank rhetoric has bond markets in a spin,” says Thursday’s fixed-income note from French investment and bullion market-making bank Societe Generale.
 
“The market has apparently over-interpreted Draghi’s remarks [on Euro policy from Monday]…while Carney [at the Bank of England] cut a more hawkish line, keeping Gilts under pressure.”
 
Major government bond prices fell again Thursday, driving both UK and German 10-year yields up to their highest since late-March above 1.2% and 0.44% per annum respectively.
 
UK inflation was last reported at 2.7% per year including home-owner costs, the highest since 2012.
 
Germany’s latest inflation report today defied analyst forecast for a slowdown, rising instead to 1.6% per year.
 
“Sell rallies in gold and silver,” says a new presentation from their SocGen colleague, metals analyst Robin Bhar.
 
“Electoral uncertainty in Europe and political bickering in the US buoyed gold prices in Q2 [but] Fed tightening this year and in 2018 – whether in the form of higher interest rates or balance sheet deleveraging – will inevitably dent investors’ appetite.”
 
For silver, Bhar says, “a modest rise in industrial usage will be followed by a gradual weakening [again on] gradual US monetary policy tightening…along with a slowdown in key emerging economies, particularly China.”
 
Wednesday’s 10 cents rise in silver prices saw giant exchange-traded product the iShares Silver Trust (NYSEArca:SLV) shrink 0.2% as investors liquidated stock.
 
Needing 20 fewer tonnes of bullion backing by market close, the SLV’s holding of 10,551 tonnes was virtually unchanged from either the start of 2017 or this point last year.
 
The Chinese Yuan rose Thursday to new 7-month highs against the Dollar, joining the Euro at its highest US exchange rate since Donald Trump won the presidential election in November.
 
That helped Chinese gold premiums – over and above the global benchmark of London settlement – rise despite little change in Yuan prices, nearing the strongest incentive for new bullion imports to the world’s No.1 consumer market at $12 per ounce.
 
Gold premiums in India have meantime jumped to 7-month highs at $10 per ounce over official import prices, Reuters reports, because “People are advancing buying to avoid paying additional tax” after this weekend’s application of 3% sales tax under the new GST regime according to Mumbai Jewellers Association VP  Kumar Jain.
 
Data compiled by specialist analysts GFMS says India’s gold imports rose over 300% last month from May 2016, the newswire adds.

Gold Bounces vs 'Reflation' Euro as FANG Tech Stocks Get 2.5% of Global Fund Allocations

June 28, 2017
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GOLD FUNDS ticked higher Wednesday morning as world equity indices slipped for a second day – led by pre-market trading in US tech stocks such as Google – and the Euro retreated from 1-year highs versus the Dollar hit after Euro central-bank chief Draghi said the currency union may be enjoying economic “reflation”.
 
Currently holding deposit rates for commercial banks at minus 0.4% per year and buying €60 billion of Euro government debt each month until at least December, the ECB “will announce a tapering [of stimulus measures] in September, to begin in January,” reckons J.P.Morgan’s global strategist Mike Bell.
 
“Financial markets are usually most responsive to any early signs of monetary policy shifts,” says a note from bullion and investment bank ICBC Standard.
 
“By the time the actual rate changes occur, the currency has already experienced much of the benefit.”
 
The Euro however sank almost 1 cent today from Tuesday’s new top above $1.34 after Italy reported slower inflation in May, missing analyst forecasts.
 
Silver tracked commodities higher, touching a near 2-week high at $16.86 per ounce while gold priced in Dollars rallied to touch $1254 per ounce – almost unchanged for the week after Monday’s 1.5% plunge.
 
Shares in Alphabet (Nasdaq:GOOG) – the re-named parent company of search-engine giant Google – meantime held almost 6% below early June’s new all-time highs as its lawyers considered a challenge to yesterday’s  €2.4 billion fine for anti-competitive “abuse” of its “dominant position” from the European Commission in Brussels.
 
Tech-sector funds last week ended a “record-setting 15-week inflow streak” says Cameron Brandt, director of research at EPFR Global, which tracks some $24 trillion of asset allocation worldwide.
 
That still meant “fund managers have nearly doubled their exposure to the four FANG technology stocks since 2014,” Brandt says – namely the US giants Facebook, Amazon, Netflix and Google.
 
Chart of global investors allocation to FANG stocks. Source: EPFR
 
Investors worldwide meantime “pulled over $1 billion out of all Commodities Sector Funds [last week] for the second time year-to-date,” says EPFR’s data, “with dedicated Gold Funds accounting for around half of the headline number.”
 
Tuesday’s rally in Dollar gold prices left the giant SPDR Gold Trust (NYSEArca:GLD) unchanged in size yet again, need 853 tonnes of gold backing for its stock exchange-traded shares.
 
The GLD now accounts for 37% of all gold-backed ETF holdings worldwide.
 
Gold priced in Euros meantime bounced €7 per ounce Wednesday morning from an overnight drop beneath €1100, the lowest level since New Year 2017.
 
After Italy sidestepped Eurozone rules on illegal state aid to pump €6 billion into bailing-out two failed lenders at the weekend, “What’s becoming clear as an investor is bank risk is as much down to the attitudes of local politicians as it is down to the law,” says Paul Smillie of $465bn Singapore bond-fund manager Columbia Threadneedle. 
 
“Agreement from the EU Commission is a formality,” said Banca d’Italia deputy Fabio Panetta on Tuesday in Rome, where prosecutors are now seeking to put former Veneto Banca CEO Vincenzo Consoli on trial together with 9 other senior managers for “irregularities” in running the lender.

Gold Bullion Rallies in Dollars, Squashed by ECB's 'Stimulus' Euro as China's Hong Kong Imports Drop

June 27, 2017
Latest News
GOLD BULLION rallied 0.6% against the US Dollar at the start of London trade Tuesday, but fell again versus the Euro after European Central Bank chief Draghi vowed “constant stimulus” to support growth in the single currency’s 19-nation bloc.
 
Government bond prices fell across the board but most sharply on Euro debt, pushing 10-year German Bund yields up to 1-month highs of 3.12% per annum as Italian yields shot higher from yesterday’s 5-month lows.
 
The Euro meantime shot up towards this month’s post-Donald Trump victory highs above $1.12 to the Dollar, pushing the gold price for German, French and Italian investors down near its lowest level since the start of 2017.
 
Recovering two-third of yesterday’s $20 per ounce loss, gold priced in US Dollar traded around $1250 – just over 1% higher than its 2017 average to date – as New York opened for business.
Chart of gold price in Dollars vs in Euros. Source: BullionVault
 
“We can be confident that our policy is working and its full effects on inflation will gradually materialise,” said ECB president Draghi at the start of a central bank forum at its HQ in Frankfurt, Germany on Tuesday morning.
 
Despite growing analyst chatter over a possible ‘tapering’ of the ECB’s money-creation QE scheme however, “For that, our policy needs to be persistent,” Draghi went on, “and we need to be prudent in how we adjust its parameters to improving economic conditions…to ensure that our stimulus accompanies the recovery amid the lingering uncertainties.”
 
Global stock markets fell again, pulling the EuroStoxx 50 index down 3% from early May’s 2-year high.
 
Crypto-current Bitcoin also fell again, extending its loss from mid-June’s new all-time high to more than one-fifth in US Dollar terms, but held 270% higher from this time last year.
 
Having risen 9-fold in two months, challenger ‘coin’ Ethereum has now dropped over 30% from its record peak of 2 weeks ago today.
 
The release of Draghi’s speech coincided with the afternoon gold price benchmarking in Shanghai, which also coincided with a sharp rally in the Chinese Yuan from 1-month lows in its FX rate vs the Dollar.
 
Shanghai’s PM Fix rose 0.3% from Tuesday morning’s 6-week low in Yuan terms, holding the price of gold bullion landed in the world’s No.1 consumer market at an equivalent $9.50 premium per ounce over comparable quotes in London, heart of the world’s wholesale trade.
 
New data yesterday said mainland China imported 45 tonnes of gold bullion in May through the city of Hong Kong – set to mark the 20th anniversary of its handover from Britain this weekend – reports German finance group Commerzbank.
 
“This was almost 40% less than in the month before, and a good 60% less than last May,” Commerzbank says, “though that was admittedly a month of unusually high imports.”
 
Year-over-year, analysis by BullionVault puts China’s imports of gold bullion through Hong Kong some 15% below this point in 2016 for the sharpest annualized decline since summer 2015.
 
China’s Communist Party regime has since 2014 allowed direct but unstated imports of gold bullion to Beijing, as well as through the industrial and financial centers of Shenzen and Shanghai, all reducing Hong Kong’s dominance of the trade.

London Trading Sees Gold Plunge as Italy's Taxpayers Rescue Failed-Bank Investors

June 27, 2017
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GOLD TRADING in global wholesale center London saw prices sink at the opening of business on Monday after Italy sidestepped Eurozone rules on banking bail-outs to protect creditors of two failed lenders in the Veneto region around Venice.
 
Trading $2 lower per ounce in Asia overnight, the gold price today then plunged $10 from $1254 to hit its lowest Dollar price since mid-May at 9am London time.
 
Gold bullion also sank 1.5% versus the Euro – hitting its lowest price since end-January at €1106 per ounce – and traded 1.7% down versus the British Pound to touch 4-week lows beneath £972.
 
Silver also sank with gold at the start of London trading, losing 1.5% but then recovering half that plunge against all major currencies to trade above $16.60 per ounce in Dollars.
 
Platinum fell harder, down almost 2% to touch 7-week lows at $914.
 
“No-one has a clue, apart from the unfortunate individual that pressed the wrong button,” Bloomberg quotes precious metals trader David Govett at brokerage Marex Spectron in London, blaming a so-called ‘fat finger’ for gold’s plunge.
 
A frequent critic of ‘point and click’ trading via electronic exchanges, “These moves are going to become more widespread with the way things are going,” Govett said.
 
Bullish betting on gold prices amongst hedge funds trading Comex futures and options last week fell back below its average since 2007, net of bearish bets amongst that same ‘Managed Money’ category.
 
That ‘net speculative long’ position has only grown above its 10-year average 8 times in 25 weeks of 2017 so far.
Chart of 'Managed Money' and 'Non-Reportable' traders' net speculative long in Comex gold futures and options. Source: BullionVault via CFTC
 
“This plan is a dagger in the heart of the Eurozone banking union,” writes former FT columnist and current La Repubblica economics writer Ferdinando Giugliano of the weekend’s €10 billion Veneto banking rescue.
 
“The government could have taken a less expensive route, involving the ‘bail in’ of senior bondholders…[but] many of these instruments are in the hands of retail investors, who bought them without being fully aware of the risks involved.”
 
But “to avoid an economic disturbance in the Veneto region as a result of the liquidation of BPVI and Veneto Banca,” said European competition commissioner Margrethe Vestager, approving the decision on Sunday, “Italy considers that State aid is necessary.”
 
Gold in Dollars, says a trading alert from French investment bank Societe Generale’s technical analysis team, “is now flirting with the bullish channel support that has contained the up-move since last December at $1241.
 
“A definite break below will signal the extension of the ongoing correction.”
 
Shanghai gold trading had earlier seen the Yuan price rise to its highest level in almost 2 weeks, holding the premium above London quotes at $9.70 per ounce.

Gold Prices Mark UK's Brexit Vote Anniversary +16% in Sterling, Lower in Dollars

June 23, 2017
Latest News
GOLD PRICES on Friday marked the first anniversary of Britain’s referendum vote to leave the European Union by trading 0.7% lower from 23 June 2016 in Dollars, 1.1% higher in Euros, and 16.0% higher against the British Pound.
 
European stock markets extended this week’s drop as gold prices pushed $5 higher from last Friday to $1258.75 per ounce.
 
That helding the MSCI World Index near unchanged for this month so far but 15.2% higher in US Dollar terms from the day of the UK’s Brexit vote.
 
London’s FTSE100 index has risen 17.0% in Sterling terms since what leading anti-EU politician and campaigner Nigel Farage called “the UK’s independence day…a victory for real people“, but it has only gained 1.9% in non-Sterling terms after accounting for the Pound’s crash on the currency market.
 
The gold spot price in Sterling rose 0.8% on Friday from this time last week, trading above £988 per ounce.
 
Gold fixed the afternoon of 23 June 2016 at £851.57, hitting a 3-year peak at £1069 two weeks later.
Chart of the gold price today and since 2003 in UK British Pounds. Source: BullionVault
 
Chinese gold prices meantime fixed Friday afternoon in Shanghai 0.4% higher from last week, with the premium over comparable London quotes rising to 1-month highs near $10 per ounce in the world’s No.1 gold-buying nation.
 
Indian gold prices have also risen to their highest for a month against the global reference of London wholesale quotes, Reuters reports, albeit reaching a premium of just $1 per ounce versus last week’s $3 discount for the world’s No.2 buyers.
 
“Jewellers,” the newswire quotes a Mumbai bank dealer, “are now focusing on implementation of the GST” – the general sales tax set to standardize rates from 1 July on goods and services across India, now forecast to overtake China as the world’s most populous nation within a decade.
 
Decided at 3% for gold bullion – and so replacing the current 2% VAT and 1% excise duty – the new GST will run to 18% on the fabrication costs of gold jewellery.
 
“This is perhaps the best time to buy gold jewellery,” reckons India Today, reviewing the new rates on a raft of consumer goods from mobile phones (12-18%) to laptops (18%), televisions and refrigerators (both 28%).
 
Meeting EU counterparts meantime in Brussels today, UK prime minister Theresa May was told her proposed “settled status” for EU nationals living in the UK for 5 years prior to March 2019’s Brexit deadline is “a first step but not sufficient” by European Commission president Jean-Claude Juncker.
 
Arab states led by Saudi Arabia today issued a 13-point list of demands to end their diplomatic and economic freezing out of Qatar over its support for terrorist and political groups.
 
The demands start with cutting diplomatic ties to Iran, plus shutting down Turkey’s new military base in Qatar “immediately”, and also include shutting down the Qatari royal family-backed Al Jazeera news service.

Gold Bullion 'Set to Recover' as Stocks Fall 3rd Day on Global Crude Oil Glut

June 22, 2017
Latest News
GOLD BULLION halved a 1% rally from yesterday’s new 5-week lows against the Dollar on Thursday, dipping back below $1250 per ounce as world stock markets fell for a third day, pulled down by oil and energy shares.
 
Crude oil traded near 12-month lows around $42 per barrel of US benchmark WTI.
 
Major government bond prices rose, pushing 10-year US Treasury yields down towards their lowest since Donald Trump’s election victory in November at 2.16% per annum.
 
“We’re not at the point where we think we need to cash out from the US [stock market] yet,” Dow Jones Newswire quotes Tom Siomades, head of the $87 billion Hartford Funds group.
 
“Global growth hasn’t been great, but it’s been okay, and that’s helping us hang in there.”
 
Looking at the plunge in oil prices, “US shale output is expected to hit a record high next month,” says the Wall Street Journal.
 
“Gasoline demand is still weaker than its was last year in June.”
 
With annual demand of 7.2 billion barrels in 2016, the US ended last week with total stockpiles of crude oil and petroleum products greater than 2bn barrels.
 
Chart of US stocks of crude oil and petroleum products. Source: EIA
 
Adding sharply to the Opec oil cartel’s output so far in 2017, Iraq this week saw “an official declaration of defeat” by the self-declared Islamic State terrorist army in Mosul, says the country’s prime minister Haider al-Abadi, pointing to ISIS’s destruction of the city’s ancient Great Mosque of al-Nur.
 
Turkey’s president Recep Tayyip Erdogan meantime called on Saudi Arabia‘s King Salman and new Crown Prince Mohammed to end the sudden isolation of Qatar over what Ankara’s ally calls 
“unjustified” claims it supports terrorism.
 
Silver today tracked gold bullion prices, rallying back to unchanged for the week near $16.70 per ounce, some 30 cents above yesterday’s new 1- month lows.
 
For Euro investors however the gold price per kilo retreated this morning back below last Friday’s 6-week finishing low of €36,000.
 
Gold bullion in Shanghai meantime fixed 0.6% higher than yesterday’s new 5-week low beneath ¥276 per gram.
 
That held the premium to London quotes just shy of $9 per ounce, in line with the typical incentive for new imports into the world’s No.1 gold mining, importing and consumer nation.
 
“Market has sold off to the $1243 seven-month support line and should see recovery from here,” says the latest Bullion Weekly Technicals from German financial group Commerzbank.
 
“Only failure at the $1214 mid-May low will destabilise the chart and introduce scope for a retest of the $1123 mid-December low” – then gold’s bullion lowest Dollar price since the 6-year lows of end-2015.
 
“Gold has embarked on a pullback,” says technical analysis from French investment and bullion market-making bank Societe Generale, “[and] has confirmed a short-term Head and Shoulders [pattern] indicating a retracement.
 
“Potential of the pattern stands at $1230/1226.”

Gold Price Slips vs. Falling Dollar as Oil Bounces, Bank of England Split Boosts 'Brexit-Hit' Pound

June 21, 2017
Latest News
GOLD  PRICES held near 5-week lows against a falling US Dollar on Wednesday, trading at $1243 per ounce as commodities rallied but world stock markets extended Tuesday’s retreat in New York.
 
As Brent crude oil rallied $1 per barrel from yesterday’s 7-month lows near $45, that pulled the EuroStoxx 50 index of major European shares more than 1% lower.
 
The British Pound meantime rallied after a split emerged amongst senior Bank of England policymakers over holding or raising UK interest rates from the current all-time record low of 0.25% with £435 billion ($550bn) of quantitative easing bond purchases.
 
The Euro currency also rallied against the Dollar, but held 1 cent below last week’s peak, the highest level since Donald Trump won the US presidential election last November.
 
The gold price for Eurozone investors fell below €1115 per ounce, near its lowest level since January.
 
Chart of gold price in Euros since 2004. Source: BullionVault
 
Queen Elizabeth II today went to the UK Parliament by car, not horse-drawn coach – and without wearing a crown – to outline the new minority Conservative Government’s new legislative plans.
 
With next year’s Queen’s Speech already cancelled due to the time needed to process these latest proposals, eight of the 24 bills named today deal exclusively with Brexit, aiming for what Her Majesty called a “smooth and orderly” departure from the European Union.
 
“Since the prospect of Brexit emerged,” said Bank of England Governor Mark Carney in his annual Mansion Speech this week – published late Tuesday – “financial markets, notably Sterling, have marked down the UK’s economic prospects.”
 
The Pound Sterling fell to new 2-month lows following the release of Carney’s speech.
 
“Monetary policy cannot prevent the weaker real income growth likely to accompany the transition,” Carney said. “But it can…support the economy during this transition.
 
“Stimulus is working.”
 
“Provided the data are still on track,” countered the Bank’s chief economist Andrew Haldane today, “I do think that beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second half of the year.
 
“It will be a sign of the economy itself having begun to normalise.”
 
Amongst 18 charts in Haldane’s presentation at the National Science and Media Museum in Bradford, one shows each of the Bank’s quarterly Inflation Reports since 2011 over-estimating the pace of average UK wage growth in 2015 and beyond.
 
The Pound recovered half of this week’s previous 2 cent drop, rallying to $1.27 and knocking the gold price in Sterling back £10 to £979 per ounce.

 

Gold Price Hits New 1-Month Low as 'Hawkish' Fed Considers Higher Inflation Target

June 20, 2017
Latest News
GOLD PRICES popped $5 higher Tuesday lunchtime in London, rallying from new 1-month lows beneath $1243 per ounce hit after what pundits and analysts took to be “hawkish” comments on interest rates from a senior US Federal Reserve official.
 
Having raised rates to a ceiling of 1.25% last week, “This is actually a pretty good place to be,” said New York Fed chief William Dudley late Monday.
 
“We are pretty close to full employment. Inflation is a little lower than what we would like, but we think that if the labor market continues to tighten, wages will gradually pick up and with that, inflation will gradually get back to [the Fed’s target of] 2%.”
 
Chart of US non-farm payrolls (left) vs. US Consumer Price inflation, both 1-year percentage change. Source: St.Louis Fed
 
The bulk of betting on US Fed interest-rate futures now sees the US central bank holding unchanged until December, when 45% of current betting now sees a further rise to a ceiling of 1.50%.
 
Lagging its 2.0% annual inflation target in 75 of the last 120 months, the Fed is reviewing and may raise that target, Fed chair Janet Yellen said in her post-decision press conference last week.
 
US consumer price inflation has since June 2012 averaged 1.3% per year on the official CPI measure.
 
Excluding ‘volatile’ fuel and food however, that average rises to 1.9%.
 
“The Fed’s hawkish stance heightened carry and opportunity costs, and proved to be a catalyst for price corrections in precious metals,” says Canadian brokerage TD Securities.
 
“Once we failed again just below $1300,” says London bullion broker David Govett at Marex Spectron, “the writing was on the wall.
 
“This coincided with yet another rate rise from the Fed and this – combined with abnormal silence from Trump and general peace and quiet in the world – has contributed to gold’s pullback.”
 
With world stock markets flat overall near all-time record highs Tuesday, crude oil meantime hit new 7-month lows, led by forecasts of a worsening glut of production according to analysts.
 
“Recent data points are not encouraging,” says US investment bank Morgan Stanley, pointing to swollen crude oil stockpiles across the developed world, China and other emerging markets.
 
“If we get bearish US oil [inventory] statistics this week, we could see a test of $45 on Brent,” reckons London brokerage PVM Oil Associates’ senior analyst Tamas Varga.
 
Europe’s benchmark crude oil price, Brent last traded below $45 in late-summer 2016, rallying one-third to New Year 2017 but falling near that level again today with a 2.6% plunge in Dollar terms.
 
Precious metals meantime bucked the slump in broader commodity markets, with silver rallying 0.8% from yesterday’s new 1-month low at $16.49 and platinum prices bouncing 1.1% to $929 per ounce.
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