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Gold Price Hits 9-Week High as Dollar Falls, Trump Trade Tariffs 'Threaten Inflation', Silver Comex Bulls +10%

January 24, 2017
Latest News
GOLD PRICES touched 9-week highs against a falling Dollar on Monday, rising while world stock markets fell amid fresh concerns over inflation as new US president Donald Trump moved to enact more of his campaign promises on trade and regulation.
 
Gold prices twice hit $1219 per ounce, the highest since 22 November in Dollar terms, but held 0.8% below last week’s high versus the single-currency Euro of €1141.
 
Silver held firm with gold prices against the Dollar, trading near $17.20 per ounce as commodity prices rose with government bond prices.
 
That pushed longer-term interest rates down even as market-based expectations of future US inflation held near 29-month highs.
 
Bullish speculation in Comex gold futures last week retreated net of bearish bets amongst non-industry players according to data from US regulator the CFTC compiled by Canada-based bullion bank Scotia.
 
Including options contracts however – giving more leverage but also more risk to derivatives traders – the ‘Managed Money’ category grew its net bullishness for a second week running.
 
So-called “net speculative length” grew 10% to stand just below half its last 10 years’ average.
 
Net speculation in Comex silver futures and options amongst money managers also grew by one-tenth, rising to 225% of the last decade’s average.
Chart of 'Managed Money' net speculation via Comex silver futures and options. Source: BullionVault via CFTC's Commitment of Traders report
 
“Gold is finding support from the weaker US Dollar,” says a note from German financial services group Commerzbank’s commodities team.
 
“[The Dollar] depreciated noticeably following [Friday’s] inaugural speech. Yields on 10-year US Treasuries have also fallen sharply again.”
 
The Dollar fell Monday to new 7-week lows versus the Euro, retreating from an earlier bounce as new US president Donald Trump prepared to strike out the controversial Trans-Pacific Partnership trade deal (TPP) according to sources.
 
Trump also met with leading US manufacturing bosses, telling them he plans to “cut regulations by 75%. Maybe more.”
 
But any companies which don’t bring jobs back onshore and import goods to the US will suffer “a very major border tax,” Trump warned.
 
The UK Government will also offer UK businesses “a range of support, including addressing regulatory barriers,” said Prime Minister Theresa May on Sunday, launching what her Conservative administration calls a “modern industrial strategy” already welcomed as a “landmark opportunity” by business leaders’ lobby group the Confederation of British Industry.
 
“The first risk [of] higher inflation seems to come from stronger growth,” says currency strategist Steven Barrow at Chinese-owned commodities and bullion market-maker ICBC Standard Bank, noting that the US economy “is already at full employment” according to the Federal Reserve.
 
“A second threat comes from the rise in commodity prices…[and] a third risk is the stronger Dollar…It could quickly raise price pressures globally, and especially in emerging market countries as their currencies fall.
 
“The Trump presidency also implies a protectionist threat. The border tax would lift domestic [US] inflation.”

Gold Bullion +40% Under Obama, Quiet as Trump Sworn In

January 21, 2017
Latest News
GOLD BULLION headed for a small weekly gain in quiet trade versus most major currencies on Friday, ticking back abover $1200 per ounce against the Dollar as billionaire celebrity businessman Donald Trump prepared to be sworn in as the 44th President of the United States.
 
World stock markets were also quiet ahead of Trump’s inauguration, and the Euro was little changed on the forex market, holding 3 cents above December’s 14-year lows at $1.03 versus the Dollar.
 
US government bonds slipped again in price however, nudging 10-year Treasury yields up to their highest in 2017 so far at 2.48% – almost exactly where they stood when Barack Obama was inaugurated at the start of 2009.
 
The S&P500 index of US-listed corporations has risen 180%, not including dividends, while the US Dollar has risen 13% against a basket of the world’s other major currencies.
 
Gold bullion has risen over 40%.
Chart of gold's performance during the last nine US presidents. Source: BullionVault
 
After Trump’s victory speech on 9 November saw equities jump but gold bullion start a 5-week fall, “We’d expect an appropriately presidential tone to be struck [today],” says Jonathan Butler at Japanese conglomerate Mitsubishi.
 
“The Dollar will gain and bullion will once again be under pressure, along with the rest of the precious metals complex…[unless] we get any of the campaign-trail divisive rhetoric.
 
“That’s probably going to sink the reflationary trade and boost gold as a safe haven.” 
 
Looking futher ahead in 2017, “[We] stick with our Icarus Trade view,” says a note from Bank of America-Merrill Lynch, pointing to equities and other assets recently soaring in price, “[with] any Jan/Feb wobble followed by one last 10% melt-up in stocks & commodities.
 
“[But] investor ‘hubris’ [will then] signal the ‘Big Top’.”
 
Europe’s Brent crude oil price benchmark today rose near $55 per barrel, more than double the “twelve-year low of $27 hit a year ago today,” notes the commodities team at German financial services group Commerzbank.
 
“One key role in this has been played by the production cuts” from oil cartel Opec, “yet it is too early to judge if [they] and a number of non-Opec countries [will now] reduce their output as agreed.”
 
Copper slipped Friday however, dropping over 3% from last week’s return to December’s 18-month highs but still one-third above January 2016’s seven-year low.
 
Gold meantime ended the week dead-flat in Shanghai versus the Yuan, fixing at ¥292 per gram but cutting the premium for bullion landed in the world’s No.1 consumer market to just $10 per ounce over London quotes.
 
That was well below last month’s 3-year peak of $40 – some 16 times the typical Shanghai gold bullion premium – when stockpiling ahead of the coming Lunar New Year’s retail demand met tighter import licensing by Beijing.
 
Now the No.2 consumer nation, India this week saw premiums recover to $2 per ounce according to dealers, inclusive of the country’s 10% import duty, amid the current wedding season on Hindu calendars.
 
“Buyers are anticipating a cut in import duty in the [February 1st] budget,” Reuters quotes Chennai wholesaler MNC Bullion’s Daman Prakash.
 
“That is prompting them to delay purchases.”

Gold Prices Rise vs Euro, 'Vulnerable' at $1200 as Dollar Rises, ECB Warns on Inflation Before Trump Inauguration

January 20, 2017
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GOLD PRICES rose versus the Euro but fell against the Dollar lunchtime Thursday in London, as Eurozone central-bank chief Draghi urged governments to boost fiscal stimulus and warned that inflation is likely to rise further, but held the 19-nation currency union’s key interest rates unchanged.
 
Dropping back towards the $1200 per ounce level for US investors, gold prices rose to €1132 versus the Euro.
 
Shanghai gold prices had earlier retreated near 3-week lows at the city’s afternoon price benchmark, as the Yuan slipped on the FX market from this week’s sharp rally off 8-year lows.
 
Ahead of next week’s key Lunar New Year retail demand, that cut the Shanghai premium over London quotes – a measure of China’s wholesale demand vs. supply – to $15 per ounce, some 6 times the typical incentive to new imports.
 
With Chinese investors and savers trying to escape the weakening Yuan, gold-backed ETF vehicles in the world’s No.1 gold-consumer nation are bucking the global trend and seeing net inflows, reports Bloomberg.
 
Huaan Yifu Gold ETF “is getting all the attention,” the newswire says, “attracting almost $72m last week” but keeping the 4-year old trust fund’s total asset value well below $1 billion.
 
Well over 30 times larger meantime, shareholdings in the world’s  largest exchange-traded gold trust – the New York-listed SPDR Gold product (NYSEArca:GLD) – held unchanged yet again on Wednesday, needing 807 tonnes of bullion to back its value, an 8-month low, despite gold prices trading near 8-week highs.
 
Bullish speculation by the ‘managed money’ category of traders in US Comex gold futures and options last week rose, net of bearish bets, by $2.5bn from an 11-month low beneath $4bn of total notional value.
Chart of 'Managed Money' bull vs. bear bets on Comex gold futures and options by $bn value. Source: BullionVault via CFTC
 
With 1 day until Donald Trump is sworn in as the 44th president of the United States, “Gold remains vulnerable to a further strengthening of the Dollar,” says Japanese conglomerate Mitsubishi’s precious metals specialist Jonathan Butler, “[especially if] US economic prospects are lifted by expectations of fiscal stimulus [and] President Trump’s plans for reduced corporate taxation.”
 
Forecasting a near-4% drop in 2017’s average gold price from last year however, “Increased fiscal spending…will widen the US Federal budget deficit,” Butler goes on, “[risking] protracted political disputes over government debt.
 
“Together with greater trade protectionism and/or geopolitical tensions, gold could be reasonably well supported as a risk hedge as the year wears on.”
 
Speaking at the annual Davos, Switzerland meeting of the self-declared World Economic Forum, IMF managing director Christine Lagarde today urged wealth redistribution through tax and benefits, while billionaire hedge-fund manager Ray Dalio agreed with Chinese leader Xi Jinping’s speech from Tuesday that “we may be at a point where globalization is ending, and provincialization and nationalization is taking hold.”
 
After Germany, the UK and then US all reported sharply higher inflation for December, the Czech central bank’s vice-president today said it will abandon the country’s 3-year currency peg to the Euro as rising inflation coincides with fresh capital outflows.
 
One of 7 European Union members not in the Eurozone but obliged to join the single currency at some point under the terms of accession, the Czech Republic has kept a hard cap on its Koruna’s value at 27 per Euro.
 
The CNB spent €7 billion defending the Koruna’s 27 per Euro ceiling in the first 10 days of January alone, according to Reuters data.

Gold Price 'Bullish' as Inflation Breaches Fed's 2% Target, Trump Spurs 'Currency War', GLD Misses Rally

January 19, 2017
Latest News
GOLD PRICES edged 0.5% lower from yesterday’s new 8-week high versus the Dollar in London trade Wednesday, holding above $1211 per ounce as world stock markets ticked higher and official estimates showed the fastest rate of inflation for US consumer prices since spring 2014.
 
Rising to 2.1% per year in December, in line with analyst forecasts, CPI inflation breached the US Fed’s annual 2% target for only the 10th month of the last 60, led by a sharp rise in gasoline prices.
 
The British Pound retreated today from its sharpest 1-day bounce since 2008 after UK Prime Minister May’s Brexit speech and rising inflation data saw bearish traders caught off-guard.
 
That helped the gold price for UK investors rise Wednesday back above last Friday’s finish at £981 per ounce, the highest weekly close since early November’s pre-Trump election peak near 3-year highs.
 
The Dollar meantime bounced Wednesday from its sharp drop following the Wall Street Journal reporting an interview with Donald Trump in which the president-elect – inaugurated this Friday – said “Our Dollar is too strong.
 
“Our companies can’t compete with [China] now because our currency is too strong. And it’s killing us.”
 
“Currency wars might be seen as a thing of the past,” says Chinese-owned commodities deal ICBC Standard Bank’s forex strategist Steven Barrow, pointing to the post-global financial crisis use of quantitative easing by the US Fed.
 
“However it might be this was merely the hors d’oeuvres ahead of the real currency wars about to start.”
 
But “wanting a weaker Dollar,” says Barrow’s colleague at ICBC Standard Tom Kendall in a separate gold-price note, “doesn’t sit well with some of the Trump camp’s other proposals.”
 
Lower corporation tax, repatriation of foreign earnings, and “onshoring” of manufacturing jobs lost to foreign countries all likely mean “an increased flow of inward investment and capital,” says Kendall, leading the Federal Reserve to raise its key interest rate to temper inflationary pressures.
 
“Is all of this tightening priced in already? We don’t think so.”
 
Betting on US interest-rate futures currently sees the Fed staying on hold until its mid-June meeting.
 
Just over one-third of betting on December’s meeting then see 2017 ending with one further hike, taking the Fed Funds rate to a ceiling of 1.25%.
Chart of US Fed Fund contract positioning from the CME's FedWatch tool
 
Like the Dollar gold price, US Treasury bonds also retreated from 8-week price highs Wednesday, pushing the yield offered to new buyers by 10-year debt up 0.04 percentage points to 2.37% per annum.
 
The Yuan rose to its strongest level since late November, but gold prices rose faster, pushing the Shanghai premium for metal landed in the world’s No.1 consumer nation to $17 per ounce above London quotes, almost 7 times the typical incentive to new imports.
 
Starting at the end of next week, the Chinese New Year holidays have consistently marked the heaviest period for household gold demand since deregulation began 15 years ago.
 
“Prima facie gold is a disaster,” says Ross Norman, now manager of retailer Sharps Pixley and formerly a gold trader at N.M.Rothschild and then Credit Suisse, “with the key demand sectors including India, China and central banks softer compared to recent years.
 
“Yet we remain bullish [because] a plethora of epic black swans could so easily put financial markets into a tailspin…[such as] the Eurozone elections, Middle Eastern geopolitical tension, debt ceilings, trade war between the US and China – but most of all, significant inflation.”
 
The third most successful forecaster in the London Bullion Market Association’s annual price prediction contests, Norman sees the gold price averaging $1310 per ounce in 2017 – a rise of 4.7% from 2016’s near-8% rise. 
 
Holdings in the world’s largest gold-backed ETF, the SPDR Gold Trust (NYSEArca:GLD), ended Tuesday unchanged despite the 2.1% rise in Dollar gold prices.
Chart of the SPDR Gold Trust's bullion backing vs. wholesale gold prices
 
The size of the GLD’s bullion holdings – determined by the number of shares in issue – now shows its most negative 1-month correlation with the gold price since April 2015. It has only shown a more negative 1-month correlation on 12 trading days of the last 10 years.

Gold Price Up Through 'Key' $1207 Level as 'Brexit Means UK Out of Single Market'

January 17, 2017
Latest News
GOLD PRICES hit new 8-week highs at $1218 per ounce on Tuesday as world stock markets fell for a second day but the British Pound surged as UK prime minister Theresa May said Britain “cannot possibly” stay within the European single market when Brexit takes it out of the political European Union.
 
That defied many analysts’ expectations of a fresh shock to Sterling if May said Brexit means quitting the free-trade zone‘s existing treaties.
 
“Gold still in demand ahead of Brexit speech,” said a note from German financial services giant Commerzbank this morning, pointing to rising inflows to European trust funds backed by bullion.
 
New York’s giant SPDR Gold Trust (NYSEArca:GLD) saw its shares in issue grow on Friday – requiring more metal to back them – for the first time since Donald Trump won the US election in early November.
 
US investors would today return from the Martin Luther King Day holiday to find gold prices trading 1.3% above Friday’s finish in Dollar terms.
 
“Gold price…needs to clear $1207 for the current rebound to extend further,” said a new chart analysis from French investment bank and bullion market-maker Societe Generale on Monday, repeating a technical level advised to clients last week.
 
Having hit fresh 3-decade lows on Monday, the British Pound jumped over 3 cents to touch 7-session highs above $1.23 to the Dollar, and gained more than 2% from Sunday night’s 2-month low versus the Euro.
 
That squashed the gold price in Sterling back to £985 per ounce – some 2.1% beneath yesterday’s 10-week high – even as bullion rose against most other major currencies.
 
Chart of gold price in British Pounds Sterling. Source: BullionVault
 
Ahead of May’s speech, betting against the Pound by speculative traders last week reached a 1-month high, according to positioning data collected by US regulator the CFTC.
 
Down by one-third from last July’s record ‘net short’ however, the overall bearish position amongst money managers was only 8% greater than the 2016 average.
 
May’s speech was followed by her Downing Street staff tweeting 12 points on Brexit, promising to “provide certainty wherever we can…strengthen[ing] the precious union between the 4 nations of the UK,” controlling immigration from the European Union but also guaranteeing the rights of EU citizens already here in exchange for protecting UK citizens living on the continent.
 
The United Nations estimates that 1.2 million British citizens live in other EU states, compared with perhaps 3.3m immigrants to the UK from those countries.
 
“I can hardly believe that the PM is now using the phrases and words that I’ve been mocked for using for years,” tweeted former UKIP leader Nigel Farage.
 
“Real progress.”

Gold Price Hits 8-Week High as Trump 'Shocks' Nato, UK 'Threatens' EU, Davos Politicians & Billionaires Call for 'Unity'

January 17, 2017
Latest News
GOLD PRICES jumped near 8-week highs in wholesale bullion trade Monday as weekend comments from US president-elect Donald Trump about the Nato military alliance caused shock in European capitals, and German politicians rebuked UK threats to slash corporate tax rates if a ‘hard Brexit’ from the European Union sees Britain lose access to the single market.
 
Dollar gold prices gapped higher from Friday’s finish and then rose above $1208 per ounce, some 4.9% higher for 2017 to date, before easing $5 lower.
 
Gold priced in Sterling meantime touched £1006 per ounce – its highest since 11 November – as the Pound sank ahead of a key speech on the UK Government’s Brexit negotiation plans due from Prime Minister Theresa May on Tuesday.
Chart of the gold price in British Pounds, last 20 years
GBP gold prices then eased £10 lower as world stock markets fell and government bond prices rose, nudging interest rates down.
 
“The British people are not going to lie down and say, too bad…if we have no access to the European market,” UK finance minister Philip Hammond told Germany’s Welt am Sonntag newspaper yesterday, saying Britain would “change its economic model” – widely viewed as a threat to slash corporation tax to attract multi-national businesses.
 
“The [UK’s] two major economic weaknesses,” counters German CDU party deputy-leader Norbert Röttgen “are the considerable trade deficit and the large budget deficit.
 
“Hammond’s tax cuts threats are therefore threats of self-harm…an expression of British helplessness.”
 
China will meantime “make joint efforts” when President Xi Jinping attends his first World Economic Forum in the Swiss resort of Davos this week “to explore long-term measures for the world’s development, establish a community of common destiny for mankind, and safeguard international peace and stability,” he said on arriving in Zurich on Sunday.
 
WEF founder Klaus Schwab has called on the 30,000 attendees – from actor Matt Damon to singer Shakira, business leaders, politicians, institutional investors and journalists – to “overcome the present mood of divisiveness and negativism.”
 
The European Union “is basically a vehicle for Germany,” The Times of London yesterday quoted US president-elect Donald Trump, who has now added BMW to the list of foreign auto-makers facing a 35% import duty for importing new cars to the United States.
 
“If you ask me, more countries will leave,” Trump said, adding that “I think we’re gonna get something done very quickly” on a new trade deal with the UK while calling the Nato military alliance “obsolete”.
 
That “caused astonishment and anxiety, not just in Brussels,” says Germany’s foreign minister Frank-Walter Steinmeier.
 
“Nato is very important,” Trump told the Times, but only 5 countries are “paying what they’re supposed to” at 2% of GDP on defense.
 
The US is currently sending more troops to help train and support Nato partners Poland, Latvia, Lithuania and Estonia, all of whom border Russia.
 
Gold prices also jumped against the Chinese Yuan, fixing above 270 per gram for the first time since end-November at Shanghai’s benchmarking auction but cutting the premium over London quotes to $11 per ounce as wholesale stockpiling eased ahead of the key Lunar New Year holidays, starting at the end of this week.

Gold Bullion 'Wins When Politicians Attack Central Banks', Outpaces Silver on Week

January 14, 2017
Latest News
GOLD BULLION briefly rose back above $1200 per ounce for the second time this week on Friday as world stock markets ticked higher, major government bond prices slipped, and the central bank of world No.11 economy South Korea warned of a sharp slowdown in growth, holding its key lending rate at the record low of 1.25% reached last summer.
 
Rising 2.3% from this time last week, gold bullion outpaced the 1.6% rise in US Dollar silver prices, which traded Friday lunchtime in London at $16.46 per ounce.
 
Faced with this week’s earlier new record lows in the Lira, the central bank of Turkey – formerly world No.4 gold consumer nation, now overtaken by Germany – meantime said it has “many tools” to combat “speculative” moves in the currency, echoing yesterday’s claims from President Erdogan that “There is no difference between a terrorist who has a weapon or bomb in his hand and a terrorist who has Dollars, Euros and interest [rates]…
 
 
Having demanded and then welcomed the CBRT’s rate cuts of 2016 – and then urging households to buy gold bullion alongside the Lira to cut capital outflows last month – Erdogan said the central bank should act to “ruin this game”, widely taken as a call to raise the cost of borrowing to support the currency.
 
“When you start seeing [political] pressure build on central bankers, and the market becoming far less confident [in] central bankers…in our view you get a bull market for gold,” says Christopher Mahon, director of asset allocation research for the $2.4 billion Baring’s Multi-Asset product, which has almost doubled the average gains from ‘absolute returns’ funds over the last 5 years.
 
“Their policies have been pretty inadequate in many senses,” Mahon said in an interview Monday. “It’s very plausible now that politicians stand up and throw stones at central bankers.”
 
With the US Federal Reserve not meeting until mid-March, “Unemployment has now reached a low level, the labor market is generally strong and wage growth is beginning to pick up,” said Fed chair Janet Yellen in a speech Thursday.
 
“Inflation has moved up from a very low level, and it’s a little bit under our 2% objective, but it’s pretty close.”
 
Adjusted by inflation in the official US Consumer Price Index, the effective Fed Funds rate has declined from -0.4% to -1.3% since the Fed first raised its key interest rate after 7 years at zero at the end of 2015.
 
Gold prices have now risen 15% versus the Dollar meantime. 
 
Chart of the Effective Fed Funds rate minus CPI inflation rate vs. US Dollar gold price
 
Berlin’s finance minister Wolfgang Schauble last spring accused the European Central Bank of fuelling support for Germany’s so-called “populist” AfD Party, as Bloomberg notes today, by hurting savers with its negative interest-rate and quantitative easing policies.
 
UK prime minister Theresa May last autumn called for a change to Bank of England policy after it followed the Brexit referendum shock by cutting rates and re-starting new quantitative easing, notes Bloomberg News today.
 
US president-elect Donald Trump said on the campaign trail last November that the Federal Reserve should “be ashamed” of hurting savers and distorting the economy by keeping Dollar interest rates so low.
 
Gold bullion priced in US Dollars fixed at $1196 per ounce at Friday morning’s benchmark auction in London, $10 below yesterday’s new 7-week high on trading volume matching the daily average from October-December 2016 – the strongest quarterly average since new administrators ICE Benchmarks began managing the process in early 2015.

Gold Price 'Looking to Fail' at $1205, Trump Slump 'Too Early' in Stocks as Chinese New Year Nears

January 13, 2017
Latest News
GOLD PRICES dipped back below $1200 per ounce as London trading ended on Thursday, easing $7 per ounce from the new 7-week high hit overnight in Asian trade as commodities rose again but New York stockmarkets followed global equities lower following yesterday’s press conference from US president-elect Donald Trump.
 
“Trump-inspired rally [in stocks] hits a wall after first press conference,” says a headline at the Financial Times.
 
“Best sign Trump rally is fading?” asks MarketWatch. “Stocks are getting crushed by gold in 2017.”
 
But “gold prices [are] approaching the corrective target [at] $1205,” countered the latest weekly chart analysis from German financial services group Commerzbank, now “looking for failure” after gold retraced a little over one-third of its July to December drop.
 
“Only a weekly close above $1319…[where] the 5-year downtrend [now comes in]…would be enough to negate downside pressure.”
 
Major government bond prices meantime continued to rally, driving the yield offered to new buyers lower.
 
“The real rates reversal has been good for gold,” says bullion market maker ICBC Standard Bank, noting how gold prices tend to move inversely to real yields adjusted for inflation expectations, “but we don’t think it will last.
 
“We are sticking to our view that the current rally is about to lose steam,” writes the bank’s strategist Tom Kendall, “and a more sustainable turn will have to wait until mid-year.”
 
Chart of Dollar gold price vs. 5-year inflation-protected US Treasury bond yields
 
Larger money managers “appear content to remain on the side-lines for now” Kendall explains, pointing to weak demand in exchange-traded gold trust funds.
 
“Secondly, the Chinese New Year is approaching,” meaning that wholesale bullion inflows to the world’s No.1 consumer market are now set to decline ahead of the week-long holiday of travel, celebration and shopping starting 27 January.
 
“Thirdly, it just seems too early for markets to give up on the Trump-onomics reflation trade” simply on the basis of yesterday’s widely lambasted press conference by the president-elect.
 
The largest gold ETF, the giant SPDR Gold Trust (NYSEArca:GLD) ended Wednesday unchanged in size for  a third session, needing the smallest bullion backing since last April despite gold’s near-4% rise for 2017 to date.
 
The Shanghai gold premium shrank Thursday to $13 per ounce above London quotes, 5 times the average incentive offered to new bullion imports into the world’s No.1 consumer nation, but down from late-December’s spike to 3-year highs at $40 and the lowest since mid-November.
 
Trump’s election meantime marks a “paradigm shift” for investors, according to the $120 billion US private-equity fund KKR in a note to clients, with asset-supportive policies following the global financial crisis now replaced by a focus on jobs and income also in the UK after last year’s Brexit vote.
 
The US stock market has tripled during Barack Obama’s 2-term presidency.
 
Average US house prices have recovered to 10-year highs after first cratering by one-third from their 2006 national peak.
 
The unemployment rate as tracked by Washington has retreated from a three-decade high of 10.0% to 4.7%, below its series average, but average wages have meantime risen 2.1% per year since the start of 2009 while the official Consumer Price Index has shown inflation of 1.7% per year.

Gold Prices -1% from 6-Week High as Dollar Jumps, UK Trade Deficit Yawns, Trump Denies Russia Scandal

January 12, 2017
Latest News
GOLD PRICES fell hard from 6-week Dollar highs in London trade Wednesday afternoon, losing over 1% inside 3 hours as New York stock markets opened at new all-time record highs despite a fresh scandal over US intelligence service claims that Russia’s Kremlin interfered to ensure the victory of Donald Trump for the White House.
 
The Dollar rose on the currency markets, hitting 1-week highs versus the Euro and Chinese Yuan.
 
Dropping $10 of the week’s prior $18 per ounce gains, gold prices traded back down to $1178.
 
Silver also cut its gains to 0.6% from last Friday’s finish, trading back below $16.60 per ounce after touching its highest Dollar prices in 4 weeks.
 
“I win an election easily, a great ‘movement’ is verified, and crooked opponents try to belittle our victory with FAKE NEWS,” said Trump on Twitter today after the Buzzfeed website followed CNN’s report that FBI and CIA chiefs gave the president elect a dossier claiming Russian spies hold “compromising personal and financial information” about him by publishing a document purporting to list the allegations but littered with factural errors.
 
“As someone who has covered Trump on and off for 25 years,” comments Gersh Kuntzman at the New York Daily News, “I can heartily testify that he’s a jerk.
 
“This salacious tale makes Trump look so good, I’m guessing he’s the one who leaked it.”
 
Mexican and other emerging-market bond yields meantime rose as their debt prices fell Wednesday, but US and most Western interest rates held unchanged.
 
The British Pound fell to 3-month lows near $1.21, helping the gold price in Sterling touch fresh 7-week highs above £982 per ounce, after new data said the UK’s trade deficit with the rest of the world – already at 2.8% of GDP in the third quarter of 2016 – widened to £4.2 billion for the month of November.
 
Including imports and exports of all items logged by HM Revenue & Customs, the UK’s trade deficit in goods widened by 3.6% to £13.2bn for the worst November in at least 10 years.
 
Excluding non-monetary gold however – meaning primarily shipments of large bars through the London bullion market, the global center for wholesale dealing – the UK’s trade deficit in goods worsened 3.7% to £12.7bn, the second widest gap ever after September’s record £14.4bn reading.
Chart of UK trade balance in goods, HMRC data, with and without 'non-monetary gold'
 
November’s 2.5% drop in the Dollar gold price saw London gold inflows fall by one-fifth as outflows rose 5-fold from October.
 
UK gold exports to Switzerland – the world’s key refining hub, where 400-ounce Good Delivery bars withdrawn from London storage are transformed into 1 kilo gold bars before shipping east to meet demand in China and India, the top 2 consumer nations – rose 441% to the highest value since January.
 
Ahead of the Chinese New Year, Shanghai gold prices today rose to a new 7-week high against the Yuan, offering new imports a premium back above $20 per ounce premium to London quotes – some 8 times the historic norm.

Wholesale Gold Bars +4.6% in 2017, Repeat Last 3 Januarys Even as GLD Shrinks

January 11, 2017
Latest News
GOLD BARS traded in the professional wholesale bullion market touched new 5-week highs as London opened for business Tuesday morning, reaching $1187 per ounce as world stock markets slipped again.
 
Gaining as the US Dollar also rose, gold bullion bars reached 7-week highs at £978 versus the British Pound, which fell hard as fresh concerns over the UK Government’s Brexit negotiations engulfed the opposition Labour Party.
 
Mid-morning saw the price for 400-ounce Good Delivery gold bars set the highest London benchmark since 30 November, fixing at $1183.20 per ounce for a 4.6% recovery from late December’s 11-month lows.
 
“Gold seems to be behaving true to January form,” says a note from London brokers Marex Spectron, “with physical [Asian] demand picking up ahead of the Chinese Lunar New Year and investors starting to buy as the great unknown of the Trump presidency looms.”
 
January has seen gold prices rise between 3.9% and 4.9% in each of the last 3 years.
 
“Short covering is also in evidence as we approach $1200,” Marex goes on. “However, we are not flying higher, but rather grinding out gains day by day.”
 
“Gold should continue to push higher,” agrees Swiss refining and finance group MKS’s Asian trading desk, “[to] test a move back above $1200 over the short term.”
 
“Looking into 2017,” says Canada-based investment bank and bullion clearer Scotiabank’s precious metals team, “we would not be surprised if safe-haven demand picks up as a combination of the implications of Brexit and of Donald Trump’s presidency cause some shockwaves…or better growth and higher commodity prices bring with them inflation.”
 
Demand for gold ETF investment vehicles shrank again Monday however, with the largest such product – the SPDR Gold Trust (NYSEArca:GLD) – shrinking its holdings of gold bars to a new 9-month low as shareholders liquidated positions.
 
Together with the second largest gold ETF, the iShares Gold Trust (NYSEArca:IAU), the GLD shrank by 68 tonnes in December according to data compiled and released Tuesday by market-development organization the World Gold Council.
 
Listed in New York for ease of US investor access, the IAU and GLD between them lost metal equal to more than 8 days’ global gold mining output last month.
 
Funds listed in Germany, in contrast, grew as prices fell following Donald Trump’s US election victory.
Chart of bullion held for exchange-traded trust funds backed by physical gold. Source: World Gold Council
 
“Any bullish outlook for gold will need to be driven by a recovery in financial interest,” says the latest monthly report from Scotiabank, “[because] physical demand remains depressed.”
 
Shanghai gold bar premiums held above $19 per ounce versus London quotes on Tuesday, offering new imports more than 7 times the typical incentive ahead of end-January’s Chinese New Year holidays.
 
The government of Dubai meantime imposed a new 5% import duty on gold and diamond jewelry entering the city state, raising consumer prices in the Middle East’s major shopping destination and hurting demand amongst travellers from India, where high import duty, tax declaration rules and then November’s shock demonetisation of the country’s largest banknotes have already crushed purchases by the world’s No.2 private buyers.
 
“Physical demand will be completely bad for 2017,” Bloomberg quotes Gnanasekar Thiagarajan at advisors Commtrendz Risk Management in Mumbai.
 
“For the first time Indians will be trying to buy gold cashless. That’s a big challenge.”
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