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Gold Price Breaks Below 'Key' $1233 Level as US Jobless Rate Hits 2007 Low, Political Uncertainty Fades

May 5, 2017
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GOLD PRICES erased a near-$10 rally from fresh 7-week lows in London trade Friday lunchtime as new US data put unemployment in the world’s largest economy at a 16-year low.
 
US payrolls rose by 211,000 in April on the Bureau of Labor Statistics’ first estimate, beating Wall Street forecasts of 190,000 and nudging the unemployment rate down to 4.4%.
 
Matching the lows of spring 2007 – just before the global financial crisis – that put the US jobless rate at its lowest level since spring 2001, just as the Tech Stock Crash preceded the United States’ prior economic recession.
 
Bets on the US Federal Reserve hiking its key interest rate at the June meeting jumped to show an 83% likelihood from 68% only a week ago, while the Dollar spiked on the news, before falling hard to set new 6-month lows against the Euro. 
 
The Dollar also retreated against the Japanese Yen, breaking the tight relationship between USD/JPY and gold prices in Dollar terms building since the start of 2016.
 
With French voters set to elect centrist Emmanuel Macron as President on Sunday, gold priced in Euros fell back to €1120 per ounce – the lowest since start February – as the Yen gold price struggled above 7-week lows.
 
Silver fell faster, reversing an overnight rally against the falling Dollar to erase almost the last of 2017’s previous 17% gains at $16.33 just after the US non-farm jobs data.
 
Having retreated from its 6-year downtrend at $1295 per ounce in mid-April, gold meantime fell through what one bullion market-making bank’s technical analysis team had called “an upward channel limit at $1233…[risking] a larger correction” if that gave way.
 
Chart of spot gold bullion prices with 2011 downtrend and 2017 upchannel
 
Friday’s 10.30am benchmark gold price auction in London met strong demand at that $1233 level, finally finding a balance between the volume of buying and selling at $1239 per ounce – fully $4 above the average spot-market quote.
 
“Support now comes in at $1221.60,” reckons the technical analyst on bullion-clearing bank Scotia Mocatta’s New York team, pointing to the 100-day moving average of gold prices.
 
“I am bearish on gold, targeting the $1200 level.”
 
Crude oil failed to join a broader rally in commodity prices Friday, negating “all of the gains achieved after OPEC and some non-OPEC countries decided to cut production” last November according to German financial group Commerzbank, which called this week’s “price slide…excessive.
 
“We expect a stabilisation and countermovement.”
 
World stock markets meantime edged higher, adding 2.1% to the EuroStoxx 50 index of major European equities ahead of Sunday’s second and final round in the French presidential election.
 
Latest opinion polls put centrist former investment banker Macron well ahead of anti-Euro candidate Marine Le Pen.
 
Welcoming Thursday’s vote to repeal Obamacare by the US Congress, “This has really brought the Republican Party together,” said US President Donald Trump.
 
“As far as I’m concerned, your [health insurance] premiums are going to come down.”
 
Local election results in the UK meantime showed a further swing to the ruling parliamentary Conservative Party, suggesting to pundits that Prime Minister Theresa May “looks set for a huge landslide in the general election next month.”

 

Consumer Demand to Buy Gold Trends Lower, Price Sinks After Fed 'No Change'

May 4, 2017
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BUY GOLD prices fell hard against all currencies Thursday as major government bond prices slipped, pushing longer-term interest rates higher, following yesterday’s “no change” statement from the US Federal Reserve.
 
All 9 members of the Fed’s Open Market Committee voted to keep both interest rates and the current level of QE bond holdings unchanged for another month.
 
But the accompanying statement said that the “[US] labor market has continued to strengthen even as growth in economic activity slowed…[itself] likely to be transitory.”
 
Betting on a June rate hike jumped according to data from futures exchange the CME, while commodity prices sank, knocking 2% off US crude oil and driving silver prices to their lowest since early January at $16.40 per ounce – over 12% below the 5-month peak of mid-April.
 
Demand to buy gold coins and small bars for investment saw its strongest first-quarter since 2013 in January-to-March according to new data from mining-backed market development organization the World Gold Council today.
 
“Jewellery demand is still in the doldrums” however, the WGC said, while central-bank gold buying fell to its lowest in nearly 6 years thanks to a pause in purchases by the People’s Bank of China, formerly the strongest official-sector buyer alongside Russia.
Chart of global gold demand in tonnes per quarter. Source: BullionVault via World Gold Council
 
Barring the second quarter of 2015 and the first 3 quarters of 2016, consumer demand to buy physical gold was the lowest since spring 2010 on the WGC’s data.
 
“[Total] demand is down year-on-year,” says the World Gold Council’s head of market intelligence Alistair Hewitt, pointing to “Q1 last year [being] exceptionally high [on] record-breaking surges in ETF inflows.”
 
Exchange-traded trust funds again saw “strong interest from European investors [in Q1 2017] ahead of the Dutch and French elections,” says Hewitt.
 
“Retail investment demand is strong too, up 9% year-on-year,” he adds, with gold bar and coin buying in No.1 consumer market China some 30% higher to breach 100 tonnes “for only the fourth [quarter] on record…fuelled by concerns over potential currency weakness and a frothy property market.”
 
Western gold investing demand has retreated since Q1 ended, with both the US and Perth Mints reporting multi-year lows in coin sales during April, while users of online leader BullionVault ending their strongest run of positive net gold investing in five years with a small net liquidation across last month as a whole.
 
World stock markets rose Thursday, shrugging off Wall Street’s late drop after the Fed released its “no change” statement.
 
Having risen in mid-April to touch its 6-year downtrend – now at $1290 per ounce – the gold price in Dollars today fell 4.5% below that level, dropping beneath $1230 for the first time in 6 weeks and losing over $20 from just before yesterday’s Fed decision.
 
Prices to buy gold with Euros meantime fell to 7-week lows. Wholesale bullion reached its lowest since start-February in terms of the British Pound.
 
Even before the Fed’s comment Wednesday, “The metal dropped to a 4-week low on Dollar strength following better-than-expected ADP National Employment and ISM Non-Manufacturing PMI data,” says a note from bullion market-making bank Scotia Mocatta’s New York team.

Gold Prices at 'Important' 200-Day Moving Average as US Fed Meets on Rates

May 3, 2017
Latest News
GOLD PRICES held at 3-week lows against the Dollar and touched new multi-month lows in Euros and Sterling ahead of the US Federal Reserve’s latest interest-rate and QE policy decision on Wednesday.
 
Widely expected to start slowly winding down its $4 trillion of QE asset purchases later this year, the Fed will today leave rates unchanged according to 95% of all bets on CME interest-rate futures.
 
Over two-thirds of CME rates bets on next month’s decision, in contrast, see the Fed making its second rate hike of 2017 and its fourth hike since moving off zero in December 2015.
 
Gold priced in Dollars has risen by one-fifth since then – exactly the same gain as the S&P500 index of US-listed equities.
 
“Gold is trading virtually unchanged at $1255 per troy ounce this morning,” says the daily commodities note from German financial services group Commerzbank, “which leaves it right on the technically important 200-day moving average.”
 
“Which way the gold price will go in the near future will no doubt depend mainly on the interest rate outlook indicated by the US Federal Reserve [in its ‘no change’ statement] this evening.”
 
Current betting sees only a 1-in-8 chance that the Fed will raise rates another 3 times before the end of 2017, thereby meeting the policy committee’s own New Year forecast.
 
Table of US Fed rate-change probabilities based on CME futures prices. Source: CME
 
“Should we see any surprises from the Fed push gold below the 200-day moving average,” says Swiss refiner MKS Pamp’s trader Sam Laughlin to Reuters, “expect the next target on the down-side to sit around $1230-35.
 
“Risks surrounding the upcoming French election should temper declines.”
 
Gold priced in the single Euro currency today slipped to €1147 per ounce, dropping to late-March levels and down more than 6% from mid-April’s 8-month high, reached before the first round of the French presidential election saw anti-Euro candidate Marine Le Pen come second to new centrist party En Marche’s Emmanuel Macron, whom she now faces in  Sunday’s final vote.
 
Fresh wrangling between Westminster and Brussels over the terms of reference for the UK-EU Brexit negotiations meantime saw the Pound continue to rally against the Euro, also pushing the gold price in Sterling down below £970 for the first time since February.
 
Gold prices in China – the world’s No.1 consumer nation – slipped overnight but again held above ¥280 per gram overnight in Shanghai, trading at levels last seen before start-April’s Ching Ming festival holidays.
 
Gold sales in No.2 consumer India meantime rose 30% last week from the same festive gold-buying season of Akshaya Tritiya last year, according to retailers quoted by local media.

Gold Bullion $40 Off French Election Peak, Silver 'Hammered' as $1Trn Shifts Debt Ceiling Crisis to Sept

May 2, 2017
Latest News
GOLD BULLION fell to new 3-week lows against the Dollar and touched 3-month lows for UK investors on Tuesday as the global bullion market got back to work after the long May Day holiday.
 
With the US Congress side-stepping a ‘debt ceiling’ crisis by agreeing a $1 trillion package to fund government spending until September, world stock markets extended Monday’s gain in US equities, taking the EuroStoxx 50 index to new 18-month highs, almost one-third above last June’s drop following the UK Brexit referendum’s shock result.
 
Major government bond yields ticked higher as debt prices slipped, and crude oil rallied to $49 per barrel of US benchmark WTI.
 
Silver bucked Tuesday morning’s drop in gold and also copper – now down 6% from February’s 20-month high – but kept most of May Day Monday’s 40-cent loss at $16.91 per ounce. 
 
Chart of the spot silver bullion price in US Dollars per kilo and per ounce. Source: BullionVault
 
Trading $40 per ounce below mid-April’s spike to 5-month highs in Dollar terms, gold bullion meantime slipped Tuesday to new 5-week lows beneath €1150 for Euro investors.
 
The metal has now lost almost 6% since the first round of France’s presidential election saw anti-Euro, anti-immigration hopeful Marine Le Pen of the Front National go through to face centrist and Emmanuel Macron of new party En Marche! in next weekend’s finale.
 
With opinion polls putting her well behind the former investment banker, “I urge you to block global finance, arrogance and the reign of money,” said Le Pen at the weekend, appealing to left-wing voters whose candidate Jean-Luc Mélenchon – placed fourth with 19.7% of the first-round vote – meantime urged supporters “not [to give] one single vote…to the FN.”
 
Hedge funds and other ‘Managed Money’ players trading Comex gold futures and options last week grew both their bullish and bearish bets as a group, new data showed late Friday.
 
Overall, that pushed the Managed Money category’s net speculative long position on Comex gold futures and options up to 514 tonnes of notional bullion as of last Tuesday’s close.
 
The highest level since before Donald Trump won the US election, that was 38% greater than the net spec long’s 10-year average according to data from US regulator the CFTC.
Chart of silver vs. gold Managed Money net speculative long positions in notional US$bn. Source: BullionVault via CFTC
 
Managed Money positioning in Comex silver derivatives, in contrast, showed the heaviest bearish betting since New Year, with a cut to the category’s total number of bullish bets too.
 
That slashed the net speculative long position on silver by almost one-fifth from mid-April’s new all-time record high. Back down to the smallest in 6 weeks however, it remained 235% larger than the 10-year average.
 
For gold, “Support appears at $1252.30,” reckons the latest technical analysis from Canada-based Scotiabank, pointing to the 200-day Moving Average of US Dollar prices.
 
“With China out on holiday” yesterday alongside London and most of Europe, “the natural support they provide was absent and the metals never really looked like bouncing,” says the daily trading note from Swiss refiners and finance group MKS.
 
“Silver was hammered…[and] has had quite a fall from grace after testing $18.00 less than a week ago with investors getting a little ahead of themselves.”
 
Chinese gold prices fell Tuesday to 1-month lows beneath ¥281 per gram at the Shanghai afternoon benchmarking.
 
But falling less than Dollar-price quotes, that pushed the Shanghai premium over London gold rates back up to $10.50 per ounce –a 2-week high some 12% above the last 12 months’ average.
 
China’s manufacturing activity slowed in April to its weakest in 7 months according to the Caixin PMI survey of factory managers.
 
Eurozone and UK activity held strong near multi-year highs on the Markit data agency’s reports.

 

April Sees Gold's Highest Month Average Since Oct, Silver's Best Since Sept. as India's Festival Buying Jumps

April 28, 2017
Latest News
BUY GOLD prices in London’s wholesale market held steady against a falling US Dollar on Friday, heading for a 1.3% weekly drop but rising 1.4% across the month of April at $1267 per ounce., the price to buy gold rose 1.4%,
 
Ahead of the US open, that beat the S&P500 stock index’s 1.1% gain from the end of March.
 
Crude oil traded flat around $50 per barrel. Silver prices held almost 5% lower, fixing in London at $17.41 but averaging their strongest level in April at $18.05 per ounce since September.
 
“[Silver’s] near-term outlook is positive,” says the latest Bullion Weekly Technicals from German financial group Commerzbank, saying that “silver’s correction is expected to terminate between the five-month support line at $17.39 and the December high at $17.27.”
 
“Support remains firm at $17.26,” reckons bullion bank and London market maker Scotia Mocatta’s New York desk, pointing in its daily technical note to the “76.4% Fibo retracement level of [silver’s] March-April rally. 
 
“[But] momentum indicators are bearish and risk remains…Silver appears poised to target the $17 level.”
 
After finding strond demand to buy gold at an opening suggestion of $1261.50 on Thursday afternoon, the LBMA Gold Price today met weaker buying and solid selling above $1266 at the 10:30 fixing.
 
The process – now formally regulated under UK law – found a balance between buyers and sellers at $1265.55, pulling the AM benchmark’s April average up to $1267.15 per ounce, highest monthly London AM Gold Price average since October.
 
Gold priced in Sterling also recorded its highest monthly average since October.
 
Prices to buy gold in Euros averaged their highest level since September this month, despite the single currency’s strong rally on the FX market after France’s first-round election result last weekend.
 
Chart of London Fix / LBMA Gold Price, AM auction, in USD vs EUR
 
“Silver may be down, but the return of ETF investors suggests it’s not out,” says Bloomberg, noting the recovery to 1-month highs in the size of the giant iShares Silver Trust (NYSEArca:SLV).
 
Rallying from mid-April’s drop to the smallest size in a year, the SLV ended Thursday needing 10,272 tonnes of bullion to back its shares in issue, equal to almost two-fifths of the world’s annual silver mine output.
 
The largest gold ETF in contrast – the SPDR Gold Trust (NYSEArca:GLD) – lost almost 1 tonne of bullion backing as shareholders liquidated 0.1% of the stock on a $1 rise in the spot price.
 
That took the GLD’s total backing to 853 tonnes, equal to one quarter of annual world mining output.
 
Friday meantime marked the festival of Akshaya Tritiya in India, a key date for new ventures and now also for buying gold on Hindu calendars.
 
One of the four most auspicious days on the Hindu calendar, and now the single heaviest day of Indian household gold demand, “People have great faith on Akshaya Tritiya and we expect growth to be robust 20-30%,” said Nitin Khandelwal, chairman of All India Gems & Jewellery Trade Federation.
 
That matches the typical sales growth forecast by Indian jewellers around each autumn festival of Diwali, still the heaviest season for household demand.
 
“[But] jewellers will be looking for maximum sales for this day,” Khandelwal added, “as it will be done before GST” – the general sales tax set to apply to consumer goods across India within the next few months.
 
“A high GST rate such as 6-8% could adversely affect the industry,” warned specialist analysts Metals Focus in a recent report, “resulting in more off-the-book transactions.
 
“We believe that an overall tax structure, covering both the bullion import duty and GST, should be no higher than 12-14%.”
 
Mobile payments wallet Paytm yesterday launched a new gold app, offering to let Indian households trade as little as 1 Rupee of gold at a time (1.6 US cents), stored with government-backed MMTC-Pamp, the joint-venture with leading Swiss refiners MKS Pamp.
 
Global e-tailer Amazon meantime said that April’s jewelry promotion in India has netted 3 times its typical sales, driven by demand for 22 carat items as well as small bullion coins.
 
Private demand to buy gold in China – now the world’s No.1 consumer market, overtaking India since 2013 – rose 14% between January and March from the first quarter of 2016, the state-approved China Gold Association said Friday.

Gold Price 'Likely to Rebound' But Silver Tests 2017 Uptrend as Trump's Tax Plan Sees Stock Markets Drop

April 27, 2017
Latest News
GOLD PRICES gave back most of last night’s $10 pop following news of Donald Trump’s much-trailed tax reforms on Thursday, retreating to $1263 per ounce as the Dollar rallied but commodities and world stock markets extended their drop.
 
Silver fell harder, trading almost 7% below last week’s 5-month high of $18.66 per ounce as gold held 2.7% lower.
 
The Euro eased back from this week’s earlier surge after the French election’s first-round result as the European Central Bank held its negative interest-rate and €60 billion-per-month QE policies unchanged.
 
“Economic risks are still tilted to the downside due to global factors,” said ECB president Mario Draghi in his post-meeting press conference, also blaming “sluggish [economic] reform” across the 19-nation single currency zone.
 
Trump’s White House last night published the proposed US tax reforms as a 1-page list of bullet points giving what journalists and pundits agreed to call “scant detail” or a “broad outline” depending on their political affiliation.
 
With early estimates saying the headline plans would cost $5-7trn in lost federal revenues over a decade, low-tax advocates argued Thursday that Trump’s reforms would be self-funding through higher growth.
 
But with the US debt ceiling set to be hit Friday as Congress argues over a $1trn borrowing plan, political analysts said the idea of slashing tax rates on high earners and halving the rate of corporation tax has “slim-to-no chance” of passing Senate and Congress.
 
“Gold and more importantly silver have reached first objectives,” says the latest technical analysis from Stephanie Aymes’ team at French investment and bullion market-making bank Societe Generale, pointing to $1262 and $17.50 respectively.
 
“Gold ha[d] shown an impressive recovery [to reach] trend lines drawn from 2011 at $1290…and is [now] likely to show a rebound.”
 
Silver, in contrast, today slipped below what SocGen’s note had called “a multi-month ascending channel limit” at $17.41, dipping 5 cents lower in Thursday morning’s London trade.
 
Chart of silver priced in Dollars, showing up-channel limits per SocGen's latest technical analysis
 
World stock markets fell after Wall Street turned suddenly lower late Wednesday as news broke of Trump’s tax reforms.
 
Crude oil meantime lost 1.8%, dropping below $49 per barrel of American benchmark WTI, after the weekly US inventory report showed a surge in gasoline stockpiles against slowing demand.
 
Chinese gold prices held firm in Yuan terms but slipped to the equivalent of $9 per ounce above comparable London quotes at the Shanghai afternoon fix, back in line with the official benchmark’s average premium since it launched 12 months ago.
 
British Pound gold prices fell to 10-week lows beneath £980 per ounce. That was a 3-year high when broken by gold’s Brexit referendum surge of late-June 2016.
 
“I’m sure we will…have a free trade agreement [with the UK],” said the European Commissioner for Trade Cecilia Malmstrom at a conference in Copenhagen today.

Trump's First 100 Days See Gold Price Most Closely Tied Ever to Dollar's Value in Yen

April 26, 2017
Latest News
GOLD PRICES set new 2-week lows against a rising US Dollar on Wednesday, hitting $1262 per ounce as European stock markets slipped from their two-day surge and commodity prices also fell.
 
US Treasury bonds ticked down, nudging 10-year yields up to 2-week highs at 2.34%.
 
Ahead of President Trump unveiling what he’s trailed as major tax reforms, the US Dollar meantime pushed higher against major currencies, recovering over half-a-cent from its weakest level to the single-currency Euro since late October.
 
Washington is set to mark Trump’s first 100 days in office this weekend with a government shutdown unless Congress approves an extra $1 trillion in new debt.
 
Gold prices have risen 4.3% since 20 January in Dollar terms.
 
Gold priced in the Japanese Yen, in contrast, has risen only 1.4%.
 
Chart of Dollar-priced gold vs. gold in Japanese Yen per gram (right)
 
Benchmark gold prices slipped 0.4% overnight in China, the No.1 consumer nation, falling less than Dollar gold’s drop as the Yuan fell together with Euros, Sterling and most other major currencies versus the greenback on the FX market.
 
That pushed the Shanghai premium – the incentive to shipping new imports of bullion to China from the world’s key wholesale storage point of London – up to a 2-week high of $10 per ounce.
 
Gold priced in Yen meantime rose towards a 7-week high as the Japanese currency fell hardest against the Dollar.
 
Dollar gold prices have, over the 108 trading days since Trump won the US election last November, shown a stronger relationship with the Japanese Yen than any time since 1971 according to BullionVault analysis today.
 
Showing an average r-coefficient of -0.45 on a daily basis over the last 5 years, gold’s negative correlation with the Dollar’s value in Yen terms has jumped to -0.85 since Trump was inaugurated.
 
That beats the previous peak negative correlations of New Year 1979 and summer 2004
Chart of Dollar gold's daily correlation with USDJPY, 108-day rolling average. Source: BullionVault
 
“A tax reform plan could give renewed energy to the reflation trade and damage bullion,” says the latest weekly note from analyst Jonathan Butler at Japanese conglomerate Mitsubishi.
 
“[But] in reality any reform will be forced to go through the machinations of Congress, which will most likely vote down any proposal that seeks to increase the Federal debt level.”
 
Looking ahead to Thursday’s meeting of the European Central Bank however – and with gold falling this week even as the Dollar dropped versus the Euro following centrist Emmanuel Macron’s strong showing in the first round of France’s presidential election – “renewed strength in the Dollar could further hamper gold,” Butler says.
 
“April is likely to be as good as it gets for gold in Q2,” said a note from Chinese-owned bullion bank ICBC Standard late last week.
 
“That said, we are talking about consolidation, not capitulation.”

Gold Bullion Erases $10 Bounce Despite French Election, N.Korea Risks, Imports to China Jump

April 25, 2017
Latest News
GOLD BULLION erased all of last night’s $10 rally from 2-week Dollar lows Tuesday morning in London, trading back at $1268 per ounce as world stock markets extended their gains following the first-round of France’s presidential election.
 
With pro-Euro centrist Emmanuel Macron now facing the National Front’s Marine Le Pen in May 7’s run-off, “The presence of the far-right in the second round is a risk for the country,” said current president François Hollande in a TV address to the nation.
 
“What is at stake is France’s make-up, its unity, its membership of Europe and its place in the world.” 
 
“[But] a victory by Marine le Pen is quite far-fetched,” says a note from French bullion bank Natixis, “especially given the relative success of left-wing candidates” such as Jean-Luc Mélenchon during Sunday’s first round of voting.
 
“What is more likely to impact the price of gold over the next two months is a Fed rate hike.”
 
Traders now see a four-in-five likelihood of a hike to a ceiling of 1.25% in the Fed Funds rate at the June meeting, according to data from futures exchange the CME.
 
North Korea meantime faced down the US – which reported a submarine docking in South Korea – with a series of live-fire military exercises.
 
Gold bullion imports to neighboring China, the world’s No.1 gold buying nation, last month jumped to almost 112 tonnes through Hong Kong net of re-exports, new data said.
 
The highest level since May 2016, those net imports – almost twice the size of February – came as gold priced in Chinese Yuan held flat after two consecutive months of 3% average gains.
Chart of China's net gold bullion imports through Hong Kong. Source: BullionVault via various
 
“It looks like the old inventories have been consumed and the banks are replenishing stocks,” reckons Joshua Rotbart of bullion services providers J.Rotbart & Co in Hong Kong.
 
Gold premiums for metal delivered in Shanghai, where bullion is now also imported directly, last month averaged more than $14 per ounce over and above comparable Dollar quotes in London, center of the world’s wholesale bullion trade.
 
That incentive to new gold imports has since retreated however, dropping to average $9 per ounce so far in April – in line with the 12-month average since the Shanghai Gold fix benchmark launched last April – as world prices spiked to their highest Dollar level since Donald Trump won the US presidential election last November.
 
Holding a 6.0% gain in Dollar terms since Trump’s inauguration 100 days ago, gold prices have also gained in Chinese Yuan and Euro terms,says a note from Ross Strachan at specialist analysts Thomson Reuters GFMS, “showcasing that this price rise has not been a function of Dollar weakness. 
 
“An improvement in Indian demand has also played a role…[But] a rise in geopolitical fears, not least due to events in Syria, has [also] clearly played an important part in the price increases…and encouraged investment flows.”
 
Giant gold-backed ETF trust fund the GLD yesterday grew by another 1.5 tonnes as the number of shares in issue rose, taking its total holdings back to last week’s new 2017 high of 860 tonnes with only the second back-to-back days of net investor demand of the last 6 weeks.
 
The giant SLV silver trust ended Monday unchanged, shrunk by more than 4% to need 10,119 tonnes of backing since silver bullion prices hit 5-month Dollar highs of their own a fortnight ago.
 
Silver prices today retreated back beloow $17.80 per ounce. Platinum dropped towards 2-week lows at $954 per ounce.

Gold Price Sinks as 'Markets Favorite' Macron Beats Anti-Euro Le Pen in France's 1st Round

April 25, 2017
Latest News
GOLD PRICES fell at the fastest pace in 2 weeks on Monday morning in London as pro-growth centrist candidate Emmanuel Macron received the highest number of votes in the first round of France’s presidential election, with world stock markets jumping amid a sell-off in ‘safe haven’ government bonds, writes Steffen Grosshauser at BullionVault.
 
Crude oil slipped back below $50 per barrel after an overnight jump, but the Euro held at 1-month highs to the Dollar, crushing the gold price for Eurozone investors almost 4.5% from last week’s 8-month high at €1221 per ounce.
 
Chart of gold priced in Euros, last 12 months. Source: BullionVault
Silver rallied from a plunge near 5-week lows against the Dollar at $17.65 per ounce.
 
China’s President Xi meantime called for calm over North Korea’s nuclear threats as US Navy aircraft carrier Carl Vinson sailed towards the neighboring Sea of Japan.
 
“Macron is the favourite of the markets, so there’s been a collective sigh of relief,” explained Tony Farnham at Australian stockbroking and financial services firm Patersons Securities overnight.
 
“As a result there was an exit out of the safe haven of gold into riskier investments like stock markets and foreign currency exchange.”
 
Monday morning’s benchmarking auction saw London gold prices fix at $1271 per ounce, down almost 1% from Friday’s afternoon level.
 
The Stoxx Europe 600 index of major shares meantime rose 3.8%, heading for its biggest advance since after the Brexit referendum last June.
 
The French CAC40 surged by 4.4%.
 
The 39-year old Macron – a former investment banker standing as an ‘anti-establishment’ candidate for a political party launched only last year – will now face second-placed Marine Le Pen of the anti-Euro, anti-immigration National Front on 7 May.
 
Macron has now been backed by most of Sunday’s losing contenders, except for third-placed Jean-Luc Mélenchon of Unsubmissive France, a new party also launched in 2016.
 
“It appears markets were pricing in the worst-case scenario,” said Australia and New Zealand Bank (ANZ) commodity strategist Daniel Hynes.
 
“Yesterday’s outturn was very much as opinion polls had predicted,” said Phillip Shaw, London-based chief economist at Investec Securities.
 
“But markets haven taken comfort from the avoidance of a Le Pen versus Melenchon run-off.”
 
“Gold prices have fallen sharply this morning due to the improvement in risk sentiment,” agreed Singapore-listed bank OCBC’ analyst Barnabas Gan.
 
“It does remove some of the suspense and risk-off sentiment we saw late last week.”
 
This week may now bring major US “tax reforms” on Wednesday according to an interview given by President Donald Trump at the weekend, ahead of Washington reaching its official debt ceiling – and risking a government shutdown until Congress resolves the $19 trillion limit – on Friday.

Gold Splits from Silver, Ratio Gains Before French Election But GLD Shrinks, 'Safe Haven' Demand Lacking

April 21, 2017
Latest News
GOLD PRICES spiked to a 2-day high of $1286 lunchtime Friday in London, but silver slipped below $18 per ounce as world stock markets rose and commodity prices held steady.
 
Since last Friday’s finish, gold in Dollars has trimmed 15% off last week’s strong $33 advance to the highest level in 5 months.
 
Silver prices have lost all of last week’s 3.1% gains in contrast, retreating to levels seen 10 weeks ago.
 
Today that pushed the Gold/Silver Ratio of the two precious metals’ prices up near its highest levels of 2017 so far, with one ounce of gold worth more than 71 ounces of silver.
 
The Gold/Silver Ratio has averaged 62 over the last 10 years on a daily basis.
Chart of the Gold/Silver Ratio, daily since 2005 basis London benchmark prices
 
Still beating gold year-to-date,  silver prices have been “assisted by a weaker Dollar and weaker [interest] rates,” says a note from former London bullion market-maker Barclays, warning that Comex futures positioning looks over-extended and could point to a sharp retreat ahead.
 
Physical silver held to back the value of shares in the giant SLV exchange-traded fund ended Thursday at 10,149 tonnes, near a 12-month lows.
 
“Gold remains supported by elevated investor risk-awareness in view of the full near-term political events agenda,” says a note from Swiss private bank Julius Baer.
 
But the giant GLD gold ETF yesterday reversed half of Wednesday’s strong inflows of investor cash, shedding 6.5 of the near-12 extra tonnes needed to back the trust fund’s value.
 
Strong gold demand on South Korea’s official exchange the KRX – apparently driven by the risk of conflict between the US and neighboring Communist dictatorship North Korea – is in fact coming from retailers stockpiling supplies before next month’s wedding season, says a note from specialist analysts Thomson Reuters GFMS.
 
“Most of the selling this month has been conducted by individual investors…choosing to take advantage of the recent price spikes to book a profit.”
 
Shanghai gold prices meantime closed Friday almost 1% below Monday’s spike to new 5-month highs in Yuan terms, with the Dollar-equivalent premium over London quotes extending its longest stretch below $10 per ounce since the Chinese New Year at end-January.
 
Launched 12 months ago this week, the Shanghai Gold Fix benchmark has shown an average $12.80 incentive to new bullion imports into the world’s No.1 consumer nation so far in 2017.
 
India’s gold prices have moved back to a small premium meantime, ahead of next week’s key festive Akshaya Tritiya gold buying and then spring wedding season.
 
“If the anti-establishment candidates already do significantly better,” says a note from German finance group Commerzbank looking at this weekend’s first round of the French presidential election, “this could trigger…considerable [gold] demand as a safe haven.”
 
But “I would rather sell a rally on gold in the wake of a shock result in France,” says a trading note from David Govett at brokers Marex Spectron in London.
 
“Concentrate on trading the euro instead. It is the currency that will suffer most from a Le Pen win.”
 
Gold priced in the single-currency Euro crept back up towards €1200 per ounce on Friday, halving last week’s 2.6% gain to the highest level since August.
 
UK Pound prices meantime rose back above £1000 as Sterling fell hard after news of a shock drop in UK retail sales between January and March, the first quarter-on-quarter drop since 2013.
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