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Gold Prices Halve Weekly Loss as Case for Rate Hikes 'Strengthens'

August 30, 2016
Latest News
GOLD PRICES rebounded on Friday morning in London from a two-day $20 dip as the US Dollar retreated and European stocks fluctuated before the highly anticipated speech of Fed Chair Janet Yellen at the Jackson Hole symposium.
 
Asian equities fell and Europeans stocks fluctuated on Friday.
 
The Bloomberg Dollar Index that measures the strength of the greenback against several other major currencies eased back on Friday morning.  
 
So far this Friday the Pound versus the US Dollar is set for a weekly gain whilst the €/$ cross remained almost unchanged on the week despite a jump earlier this week followed by a dip.
 
Janet Yellen’s address at 3pm London time on Friday is highly anticipated as investors wait to see if she gives any signals regarding Federal Reserve monetary policy and a new interest hike before the end of the year. The choice for a hike or not is very much dependant on the economic situation of the USA, the rate of inflation matching the official target and employment figures.
 
“Speculative investors seemed to have abandoned their long gold positions,” said Bart Melek, head of global commodity strategy for TD Securities in Toronto, as Yellen may hint at a hike in her address in Wyoming.
 
“Some gold observers are even arguing that the FOMC may increase rates as early as September,” added Melek.
 
“The outcome of the Fed’s Sept. 21 meeting will be largely determined by the tone of Janet Yellen’s speech at Jackson Hole,” said an analyst, pointing to the confident tone of some of Yellen’s colleagues regarding a rate hike in the past few days.
 
“You can’t take on risk ahead of important events,” said Takashi Ito an equity strategist at Nomura Securities in Tokyo, as there is no way to know if Yellen will make any reference of a rate hike in her speech.
 
“It’s difficult to predict. If she does make more hawkish comments the market could be chaotic in the short term,” continued Takashi Ito.
 
“Wariness ahead of Yellen’s speech gave gold a leg up” as the yellow metal in Dollars was set, before Yellen’s speech, for a small rebound and a weekly loss of 1.2%, marking the first retreat on the week since early August.
 
Gold prices for GBP and Euro investors also showed a weekly loss of 2.1% and 0.9% respectively on Friday morning. 
 
While in the past two days gold and silver prices were significantly under pressure with the firm greenback weighting on the precious metals, ” Clearly some market participants are positioning themselves ahead of Yellen’s speech,” said Frankfurt Commerzbank in a daily note, indicating they were sceptical about any clear indications of the next rate hike today.
 
With gold price resistance on a downward trend line from the post-Brexit referendum high in early July, the “metal has failed several times to move through this trend and could fall under further pressure should Yellen’s speech turn materially hawkish,” said Swiss industrial and trading services group MKS Pamp.
 
Silver prices dropped to an 8-week low of 18.69 per ounce, a level last seen a week after the Brexit referendum, as platinum was also lower on the week on Friday morning.
 
UPDATE, 2PM. The American economy grew slower than previously but in line with the consensus in Q2 2016, shown annualised GDP figures released at 1.30pm London time by the US Bureau of Economic Analysis.
 

UPDATE 4PM. Gold in Dollars whipped between 3 and 4pm rising to $1342 per ounce, a slightly higher level than last week’s close, before retreating to $1333 and more than halving this week’s loss.

Futures gains extended as Yellen declared “the case for an increase in the federal funds rate has strengthened in recent months” in Jackson Hole this afternoon. Gold for UK and Eurozone investors also rebounded on Friday afternoon.

 

Gold Prices Drop as Markets Wait for Clues to U.S. Rate Hike, Speculation of a September Rate Increase Creeps Up

August 30, 2016
Latest News

Gold Prices were flat this morning in London and then dropped sharply in the afternoon to $1328 per ounce ahead of the Jackson Hole Symposium which starts tomorrow. Markets are awaiting Janet Yellen’s speech on Friday for clues whether the Federal Reserve will raise rates this year.

Silver also retreated to $18.66 per ounce adding to Monday’s 2% drop.

Silver ETFs had their highest daily inflow since the beginning of July on Monday of 103 tons, setting a new record high of 20,690 tons according to Commerzbank.  

Holding in the gold ETFs tracked by Bloomberg were topped up by 55 tons in July as Switzerland had exported 80 tons of gold in July to the United Kingdom where a number of gold ETFs store their gold. The United Kingdom was the biggest recipient of Swiss gold for a fifth straight month. Switzerland exported a total of 192 tons of gold in July, the largest volume since December according to data published Tuesday by the Swiss Federal Customs Administration,

Oil prices fell Wednesday morning on an unexpected increase in U.S. crude stocks yesterday after gaining this week on new reports that Iran might be willing to participate in an OPEC-led production cap. 

Asian Shares were mixed with the Nikkei Stock Average rising 0.61% on the back of weaker yen due to the US Dollar broad strength.  The South Korean Kospi was down 0.30%, HK Hang Seng down 0.77% and Shanghai SSE composite also down 0.12%.

European shares rose this morning with the FTSE250 up 0.27%, Dax up 0.56%, CAC 40 up 0.73% and IBEX up 0.81%. The FTSE100 on the other hand fell 0.10% after the news that British miner, Glencore, reported a falling underlying profit and a lowering of its debt target.

The Dollar index edged 0.1% higher to 94.63 as the market eagerly awaits Janet Yellen’s speech this Friday at Jackson Hole.

Expectation of a rate hike has been building according to the FedWatch Tool. The probability of a rate rise in September 2016 has risen 21% up from the previous figure of 15%. Last week this figure was 9%.

Barclays economist Michael Gapen said “Yellen could use her Jackson Hole speech to deliver a concrete message that a rate hike will happen in the coming months if U.S. job growth stays strong. Otherwise, investors will keep doubting future rate increases.” Reuters reported.

“They question whether she will ever see data that will justify a rate hike,” continued Gapen, “I think she herself has a credibility problem with markets.”

Michael Woodford, a Columbia University economist however, stated to Bloomberg “I expect that she would want to preserve the option of moving in September without giving any very definite signal that they are ready to do it.”  Mr Woodford’s 2012 paper at Jackson Hole helped to persuade the Fed to use more explicit forward guidance on interest rates.

As for major economic data today, US Existing Home Sales will be released at 14:00 GMT.  Yesterday’s US New Home Sale beat expectations and was the highest level since 2008.  US stocks closed near record highs as the housing data help boost stocks.

Gold Price Rebounds as Markets 'Waiting-for-Yellen Mode' and Dollar Retreat

August 26, 2016
Latest News
GOLD PRICES rebounded on Friday morning in London from a two-day $20 dip as the US Dollar retreated and European stocks fluctuated before the highly anticipated speech of Fed Chair Janet Yellen at the Jackson Hole symposium.
 
Asian equities fell and Europeans stocks fluctuated on Friday.
 
The Bloomberg Dollar Index that measures the strength of the greenback against several other major currencies eased back on Friday morning.  
 
So far this Friday the Pound versus the US Dollar is set for a weekly gain whilst the €/$ cross remained almost unchanged on the week despite a jump earlier this week followed by a dip.
 
Janet Yellen’s address at 3pm London time on Friday is highly anticipated as investors wait to see if she gives any signals regarding Federal Reserve monetary policy and a new interest hike before the end of the year. The choice for a hike or not is very much dependant on the economic situation of the USA, the rate of inflation matching the official target and employment figures.
 
Annualised US GDP figures will be released later today by the US Bureau of Economic Analysis with the consensus being a slight decrease from Q2 2016 results.
 
“Speculative investors seemed to have abandoned their long gold positions,” said Bart Melek, head of global commodity strategy for TD Securities in Toronto, as Yellen may hint at a hike in her address in Wyoming.
 
“Some gold observers are even arguing that the FOMC may increase rates as early as September,” added Melek.
 
“The outcome of the Fed’s Sept. 21 meeting will be largely determined by the tone of Janet Yellen’s speech at Jackson Hole,” said an analyst, pointing to the confident tone of some of Yellen’s colleagues regarding a rate hike in the past few days.
 
“You can’t take on risk ahead of important events,” said Takashi Ito an equity strategist at Nomura Securities in Tokyo, as there is no way to know if Yellen will make any reference of a rate hike in her speech.
 
“It’s difficult to predict. If she does make more hawkish comments the market could be chaotic in the short term,” continued Takashi Ito.
 
“Wariness ahead of Yellen’s speech gave gold a leg up” as the yellow metal in Dollars was set, before Yellen’s speech, for a small rebound and a weekly loss of 1.2%, marking the first retreat on the week since early August.
 
Gold prices for GBP and Euro investors also showed a weekly loss of 2.1% and 0.9% respectively on Friday morning. 
 
While in the past two days gold and silver prices were significantly under pressure with the firm greenback weighting on the precious metals, ” Clearly some market participants are positioning themselves ahead of Yellen’s speech,” said Frankfurt Commerzbank in a daily note, indicating they were sceptical about any clear indications of the next rate hike today.
 
With gold price resistance on a downward trend line from the post-Brexit referendum high in early July, the “metal has failed several times to move through this trend and could fall under further pressure should Yellen’s speech turn materially hawkish,” said Swiss industrial and trading services group MKS Pamp.
 
Silver prices dropped to an 8-week low of 18.69 per ounce, a level last seen a week after the Brexit referendum, as platinum was also lower on the week on Friday morning.

Gold Prices Sit Tight as Markets and Investors await Clues at the Jackson Hole Symposium of a U.S. Rate Hike

August 24, 2016
Latest News

Gold Prices remained flat ahead of the Jackson Hole Symposium which starts tomorrow. Markets are awaiting Janet Yellen’s speech on Friday for clues whether the Federal Reserve will raise rates this year.

Spot gold is trading in tight range on Wednesday in London between $1340 and $1335 per ounce.

Silver is also steady trading between $19.00 and $18.83 per ounce after dropping 2% on Monday.

Silver ETFs had their highest daily inflow since the beginning of July on Monday of 103 tons, setting a new record high of 20,690 tons according to Commerzbank.  

Holding in the gold ETFs tracked by Bloomberg were topped up by 55 tons in July as Switzerland had exported 80 tons of gold in July to the United Kingdom where a number of gold ETFs store their gold. The United Kingdom was the biggest recipient of Swiss gold for a fifth straight month. Switzerland exported a total of 192 tons of gold in July, the largest volume since December according to data published Tuesday by the Swiss Federal Customs Administration,

Oil prices fell Wednesday morning on an unexpected increase in U.S. crude stocks yesterday after gaining this week on new reports that Iran might be willing to participate in an OPEC-led production cap. 

Asian Shares were mixed with the Nikkei Stock Average rising 0.61% on the back of weaker yen due to the US Dollar broad strength.  The South Korean Kospi was down 0.30%, HK Hang Seng down 0.77% and Shanghai SSE composite also down 0.12%.

European shares rose this morning with the FTSE250 up 0.27%, Dax up 0.56%, CAC 40 up 0.73% and IBEX up 0.81%. The FTSE100 on the other hand fell 0.10% after the news that British miner, Glencore, reported a falling underlying profit and a lowering of its debt target.

The Dollar index edged 0.1% higher to 94.63 as the market eagerly awaits Janet Yellen’s speech this Friday at Jackson Hole.

Expectation of a rate hike has been building according to the FedWatch Tool, which has now jumped in expectations with September probabilities at 21% up from the previous figure of 15%.   The probabilities were 9% at the start of last week.

Barclays economist Michael Gapen said “Yellen could use her Jackson Hole speech to deliver a concrete message that a rate hike will happen in the coming months if U.S. job growth stays strong. Otherwise, investors will keep doubting future rate increases.” Reuters reported.

“They question whether she will ever see data that will justify a rate hike,” continued Gapen, “I think she herself has a credibility problem with markets.”

Michael Woodford, a Columbia University economist however, stated to Bloomberg “I expect that she would want to preserve the option of moving in September without giving any very definite signal that they are ready to do it.”  Mr Woodford’s 2012 paper at Jackson Hole helped to persuade the Fed to use more explicit forward guidance on interest rates.

As for major economic data today, US Existing Home Sales will be released at 14:00 GMT.  Yesterday’s US New Home Sale beat expectations and was the highest level since 2008.  US stocks closed near record highs as the housing data help boost stocks.

Gold Prices Retreat But Could "Receive Catalyst" from Central Bankers' Meeting in Jackson Hole, Silver Down to Seven-Week Low

August 22, 2016
Latest News

GOLD PRICES hit a two-week low on Monday morning in London as the US Dollar traded higher as investors await the much anticipated speech from the Fed Chair Janet Yellen happening this Friday, writes Steffen Grosshauser at BullionVault.

Gold tested recent support levels as the metal quickly touched a low of $1331 per ounce before rising to $1336.

“The slow summer trade is yet to see a break of USD $1330 – $1360,” noted Swiss refiner MKS PAMP in their latest market update. “However we may receive a catalyst in the form of Federal Reserve Chair Janet Yellen’s Jackson Hole speech this Friday.”

Janet Yellen is due to speak at the Jackson Hole Economic Symposium in Wyoming where central bankers from around the world meet every year. This could produce some signal about the outlook of the U.S. economy, after Fed officials have hinted in the last few days of an increased probability of a further interest rate hike as early as this September.

The Fed vice-chairman Stanley Fischer said on Sunday that the U.S. economy was close to hitting the central bank’s targets for full employment and 2% inflation. 

“It will be interesting if [Yellen] takes on the slightly more hawkish rhetoric of some of her colleagues of late, as that could potentially shake markets up a little,” said an analyst at ANZ Commodity Research on Monday.  

“We think that a September move might be too early for the Fed to act, but by the same token, a December move could be late,” countered INTL FCStone analyst Edward Meir. However, the majority of market participants do not expect an increase before March next year, according to the CME’s FedWatch tool.

“The U.S. economic indicators are looking healthy and the probability of a U.S. rate hike will go up further in the coming months, rallying the dollar and putting pressure on gold,” said Barnabas Gan, an analyst at Asian bank OCBC.

The U.S. Dollar index, which tracks the greenback against a basket of other major currencies, slightly rebounded after it fell to a near two-month low of 94.07 last week.

Furthermore, “the weekend remarks out of the Bank of Japan provided support to the Dollar this morning, most pronounced in a sharp move lower in silver,” wrote MKS PAMP in a note, referring to the BOJ Governor Haruhiko Kuroda’s remark that Japan’s central bank would not rule out deepening a cut to negative rates.

Silver pulled back further from the $20 mark and dropped to a seven-week low by trading between the range of $18.76 and $19.10 per ounce so far on Monday. Platinum and palladium fell 0.6% and 0.7% respectively, while base metals were down an average of 0.5%.

Meanwhile in India, gold sales have been sluggish despite the start of the festive season. Markets were reported to be “dull” due to the soared prices this year. Gold imports in 2016 were also expected to fall to the lowest level in seven years. The combined demand for jewellery and investment fell significantly to 247 tonnes in the first half of 2016, a 42% year-on-year decrease, according to the market-development organization, the World Gold Council.

In contrast, the Russian Central Bank announced last week an addition of further 6 tonnes to their gold reserves in July. Since January, Russia added over 90 tonnes, which brings their holdings to more than 1,500 tonnes – the sixth biggest reserves in the world by country. Last year, Russia’s Central Bank added a record of 208 tonnes of gold to their holdings, while the country financially suffered from international sanctions and plummeting oil prices.

Back in Europe, the leaders of the Eurozone’s largest economies Germany, France and Italy were about to meet on Monday near Naples to discuss how to “relaunch Europe” after the Brexit.

Gold Price Slips as Dollar 'firmer,' Crude Oil Rising, 'Further ETF outflows'

August 19, 2016
Latest News

GOLD PRICE in Dollars slipped to $1345 per ounce on Friday at noon in London from a weekly high of $1358 on Tuesday, a level last seen two weeks ago.  The metal however has still added 0.7% on the week so far, as the US currency strengthened and crude oil prices rising.

The U.S main indices finished higher on Thursday as did the Japanese Nikkei today. The Chinese Hang Seng was down. The main European stock exchanges were all trading down this afternoon.

US Crude Oil prices rose above $48 a barrel and were set to finish the week with the largest weekly gain in six months. 

The Euro versus Dollar exchange rate was $1.131 on Friday afternoon, a level last reached end of June erasing a near 2-month drop on Friday morning. The £/$ cross rose this week after the post-Brexit referendum multi-years fall, but was still hovering under the $1.33 level. 

The Dollar index rose while a Fed official indicated that the US economy was able to stand another interest increase soon. 

San Francisco Fed President John Williams said that it made sense to get back to an increase, “sooner rather than later“, on Thursday. 

While the FOMC minutes released on Wednesday showed a split between policymakers regarding the rate hike timing, “The Fed could potentially move in December,” Roger Bridges from Nikko Asset Management in Sydney told Bloomberg, adding that “with uncertainty about U.S. inflation and monetary conditions around the rest of the world, the pace will be extremely measured.”

Investors will be looking for more hints when central bankers meet at Jackson Hole on August 26th, the chances for a rate hike this year stayed at 47%.

“The main factors weighing on the price are presumably the somewhat firmer US dollar and further [gold] ETF outflows of 1.3 tons,” agreed Frankfurt Commerzbank in a daily note, pointing also to a comment by New York Fed President in favour of a hike. 

The ETF SPDR Gold Trust (NYSEArca:GLD) shed a further 1.8 tonnes on Thursday leaving total holdings standing at 956 tonnes, with outflows so far this week reaching 4.5 tonnes.

In contrast with the Dollar price, gold for Eurozone and British investors showed a double digit loss on the week at Friday midday and was set for a drop from July’s multi-years peaks of 4.6% and 4.2% respectively.

UK economic indicators for July published this week were as good as expected or even better, as the retail sales rose 1.5%, the jobless number dropped despite the expectations of an increase and the inflation rate did not surprise the market.

“Shoppers shrug off Brexit gloom,” wrote the Financial Times despite the Brexit hit on business sentiment.

The year-on-year UK Core Consumer Price Index of July slightly decreased from June at 1.3%, a level not deviating from the general consensus figure, shown by statistics published on Tuesday.

Platinum prices eased back so did the silver prices in Dollars set to close the week 1.42% lower at $19.43 per ounce, a 4-week level already breached once this week on the way down.

In Rio 2016, while Team US medal tally reached 100, team GB ranked second with 22 gold medals out of 56, currently 9 fewer than in London 2012 Olympics. See our infographic on the medal count for 120 years of Olympics.

Gold Price Edges Lower as Investors Await FOMC Minutes and Yesterday’s Hawkish Comments from US FED Official.

August 17, 2016
Latest News

GOLD PRICES retreated Wednesday lunchtime amid Dollar index rise ahead of FOMC minutes released later today.

Gold slipped down 0.7% from yesterday’s high of $1358.10 per ounce to $1348.41.

The FOMC minutes are due at 6 p.m. GMT and are likely to reveal a Fed that sees fewer hurdles to an interest rate hike. In its post-meeting statement  on July 27, the Federal Open Market Committee said “Near-term risks to the economic outlook were diminished.”

Yesterday New York Fed President William Dudley said the Federal Reserve could potentially raise interest rates as soon as next month as reported on Fox Business.

“We’re edging closer towards the point in time where it will be appropriate, I think, to raise interest rates further,” Dudley then answered to the question whether the FOMC could vote to raise the benchmark rate at its next meeting Sept. 20-21, “I think it’s possible.”

Atlanta Fed President Dennis Lockhart also said he has confidence in the outlook for the U.S. economy and, as a result, wouldn’t rule out “at least one” interest rate hike this year in a speech to the Rotary Club of Knoxville, Tenn., on Tuesday.

“Early indications of third-quarter GDP growth suggest a rebound. I don’t believe momentum has stalled.”

SPDR Gold Trust (NYSEArca:GLD) increased 1.8 tonnes on Tuesday to 762.23 tonnes after losing 11.9 tonnes on Monday, which was the largest 1 day outflow since 12th July 2016.

The SPDR Gold Trust is up 27% year to date and hit a two-year high of 982.72 tonnes in early July.

A number of big-name hedge fund managers have cut back their exposure to gold during the second quarter according to their latest quarterly 13-F filing with the Securities and Exchange Commission (SEC) published on Monday.

Stanley Druckenmiller, who runs Duquesne Capital, closed his entire position in the SPDR Gold Trust, which had been his fund’s biggest allocation.  Druckenmiller still owns just over 1.82 million shares of Barrick Gold.

George Soros, who runs Soros Fund Management, also closed a position on the SPDR Gold Trust that he had bought in the first quarter in the form of call options on 1,050,000 shares.  However during the second quarter, Soros did buy 240,000 shares of the SPDR Gold Trust, a position valued at $30,365,000 by the end of that quarter.

While Soros increased its bearish bet on the stock market, he also cut back his stake in Barrick Gold, selling 18,348,235 shares in the second quarter. At the end of the quarter he held 1,071,074 million shares of Barrick Gold, a position worth just over $22.8 million.

John Paulson, the founder of Paulson & Co. maintained his holding, of 4.8 million shares of SPDR Gold Trust.

In line with George Soros, Lord Rothschild, chairman of RIT Capital Partners, is pessimistic on the outlook for financial markets and has moved to reduce the trust’s exposure to stock markets from 55 per cent to 44 per cent since the start of the year.

Some of the proceeds have been used to buy gold and other precious metals, which, at the end of June accounted for 8 per cent of the £2.8 billion portfolio according to the trust’s half-year results, released yesterday.

Asian shares have stepped back from a one-year high. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.05 per cent on Wednesday while Japan’s Nikkei rose 0.4 per cent, paring some of Tuesday’s sharp losses as USD/JPY dipped under 100.

European shares pulled back yesterday from last week’s 7 week highs with the FTSE100 down 0.19%, Dax down 1.01% and CAC down 0.55%.

Crude oil price halted its advance after the biggest four-day gain ahead of  FOMC minutes today.  After preliminary data from the American Petroleum Institute showed a surprise build in U.S. gasoline stocks yesterday, the prices sharply pared gains.

The yield on benchmark US 10 year Treasuries note was little changed at 1.58%, after climbing six basis points over the previous two days, amid hawkish comments from New York Federal Reserve President William Dudley and better-than-expected industrial production data outweighed softer inflation data.

Gold Prices Climb Up as Fed Rate Hike Expectations Recede on Soft Global Economic Data

August 15, 2016
Latest News

GOLD PRICES edged higher to $1340 per ounce on Monday morning in London following weaker-than-expected data for the U.S., China and Japan, the world’s three largest economies while global stocks stayed near 1-year highs, writes Steffen Grosshauser at BullionVault.

U.S. retail sales were down 0.3% showing a moderation in consumer spending which some market observers believe could lead to a slower economic growth in the third quarter of 2016. The data released on Friday also sent the Dollar towards its lowest level since June and lowered expectations of a Fed interest rate hike before December.

Gold traded between $1334 and $1342 per ounce on Monday so far, up from last week’s close of $1336.

“Friday’s soft U.S. retail sales and producer prices data may provide some respite for the metal this week,” noted precious metals trader Sam Laughlin at Swiss refining and finance group MKS PAMP. “However participants are pulling back their long bets, which is weighing upon rallies.” 

“We don’t expect to move too far outside of the $1330-$1360 range over the short term,” Laughlin added, reminding investors that the summer holidays in the Northern hemisphere are also likely to keep gold trading thin and range-bound.

“We maintain our overall bullish long-term view, given the negative/low real interest rate environment and persistent economic headwinds, highlighted by the latest figures from China,” said James Moore, research analyst at FastMarkets.

According to data released on Friday, the Chinese industrial production, retail sales and fixed asset investment grew weaker than expected. Japan’s GDP also grew at a rate of only 0.2% in the second quarter, below market forecasts of 0.7% and after 0.5% in Q1. Apart from the government’s new stimulus package worth $265bn, the Bank of Japan has also been running on negative interest rates since the beginning of this year.

In other metals, silver was up around 0.6% at $19.90 per ounce on Monday morning. Platinum and palladium also rose again after both metals dropped to a 2-week low last Friday. Base metals stabilised after they closed last week on average 1.5% down.

Brent crude oil continued its recovery for a third day and reached $47.15 per barrel after Saudi Arabia’s Energy Minister suggested last week a potential producer action at the next OPEC meeting in September.

Hedge funds and other leveraged speculators cut their net long positions in COMEX gold and silver futures and options for the fourth time in five weeks. They fell 4.3% to 255,773 contracts in the week to 9 August, Commodity Futures Trading Commission (CFTC) data showed on Friday. The holdings have reached an all-time high of 286,921 on 5 July.

Holdings in the world’s biggest gold exchanged-traded fund SPDR Gold Trust (NYSEArca:GLD) decreased 1.2% to 960.45 tonnes on Friday. 

This week, market participants wait for the minutes of the Federal Open Market Committee on Wednesday looking for new clues on the next rate hike by the Federal Reserve.

Meanwhile in the U.K., investors await the reports on employment, consumer prices and retail sales to be published this week to see the continued impact of the Brexit referendum on the economy.

However, the exit from the European Union could be delayed until late 2019, as Prime Minister Theresa May indicated she would not invoke “Article 50” this year and one source even commented it “could be delayed until autumn 2017” as the people in charge “don’t even know the right questions to ask when they finally begin bargaining with Europe”.

Gold Prices Rally "Loses Steam" as Global Equities Rebound and Dollar Strengthens amid "Possibilities" of Rate Hikes

August 12, 2016
Latest News

GOLD PRICES remained range-bound between $1336-1340 on Friday morning in London and is set to be higher on the week, in what some commentators called a “Rally Losing Steam” as global equities rose. The US Dollar remained solid amid strong expectations of a Fed’s rate hike later this year. After the release of worse-than-expected US retail sales data published 1.30pm London time, the Gold Price rose to $1,354.

US major indices closed together at record highs Thursday, a first since 1999 according to Bloomberg. Asian equities closed higher and European stock markets, bar the German index DAX, all rose on Friday morning.

German growth was not as slow as expected in the second quarter according to a report from the Federal Statistics Office.

The Euro slightly rose versus the Dollar to $1.1152, a July high, although the €/$ cross already reached a 6-weeks high at $1.1220 in August.

Comments by San Francisco Fed President John Williams on a real possibility of a US interest rate hike after this year’s US election supported the strength of the greenback.

“Gold should hold steady above $1300,” a China-based trader told Reuters, warning that “there could be a knee-jerk reaction on a rate hike.”

Brent crude oil rebounded and was set for weekly gains as silver and platinum prices eased back, as did copper prices.

Silver broke through the $20 level down to $19.89 early morning but was still up on the week, a level first reached early July in the aftermath of the Brexit referendum. Silver in GBP and EUR was also higher on the week Friday morning.

While US Dollar gold prices were range-bound hovering around 2% under July multi-years highs, gold in Pounds Sterling and Japanese Yen prices were set for a weekly gain of 1% and 0.5% respectively. 

In contrast, gold for Eurozone investors traded in a €3 range on both sides of €1,200 per ounce losing around 0.4% on the week.

Confirming that gold demand was impacted by the stocks rallies, “there seems to be money swishing between the two,” said senior commodity strategist from ANZ bank, Daniel Hynes, indicating that the investors’ appetite for precious metals was decreasing as the equity markets rebounded.

Worldwide gold demand soared to reach 2,335 tonnes in H1 2016 led by investment demand.  This was 16% higher than the previous record set in H1 2009, as shown in the World Gold Council’s latest quarterly Gold Demand Trend report,  published on Thursday.

“Continued economic, political and social uncertainty around the globe” were quoted by the WGC as causes for a strong demand in gold “as high quality, liquid asset”.

Alistair Hewitt, the WGC’s head of market intelligence, confirmed to the Reuters Global Gold Forum on Thursday there were “three structural factors prompting institutional investors to … increase their exposure to gold,” namely the “loosening of monetary policy” with negative interest rates, “fractious politics” such as Brexit and finally less rate hikes in the US and the “consequent slowdown of U.S. dollar strength.”

At the Rio Olympics, Team GB won so far four gold medals, the equivalent of 24g of pure gold, for almost £800 at today’s spot prices, ranking 8th on Friday morning. Team USA ranked first as it collected 96g of pure gold shared between 16 gold medals for a value of more than $4100. Our infographic on the Olympic medals and their metal value for the last 120 years tells more.

 

Platinum and Palladium Surge, Gold Prices Gain for 2nd Day as Dollar Drops After Weak US Data

August 12, 2016
Latest News

GOLD PRICES rose 0.8% to $1352.49 per ounce this Wednesday lunchtime amid Dollar index decline after weak U.S. productivity figures were published yesterday.

Silver prices made a more significant gain of 1.9% to $20.32 per ounce.

However, palladium gained the most by climbing as much as 7.6% to $746.38 per ounce this morning, the highest level since June 2015.

Platinum was also up 2.4% at $1,177.80, after rising to $1182.20 per ounce, the highest since April 2015.

Second-quarter productivity in the U.S. declined by 0.5%, the third quarter in a row of declines and the longest streak since 1979. 

The Dollar index, which tracks the U.S. currency against a basket of six peers, retreated 0.6 percent to 95.599 UK lunch time, as investors re-evaluated whether the U.S. Federal Reserve will raise interest rates this year.

Markets are currently pricing in less than a 50% chance of a rate hike in December, according to CME Group’s Fed Watch tool.

Asian stock markets finished the day down. The Nikkei 225 closed down 0.18%, Chinese Shanghai composite down 0.21%, Shenzhen composite down 0.328% and HK Hang Seng index down 0.18%, as investors awaited important data from China due Friday, including industrial production, fixed asset investment and retail sales.

European stocks are also trading lower, FTSE down 0.29%, Dax down 0.51% & CAC 0.33%.

Crude oil is down 1.26% to 42.23 prior to OPEC releasing its monthly oil market report  later today.  OPEC members are due to meet in September to discuss a production freeze. 

The world’s largest gold-backed exchange traded fund the New York-listed SPDR Gold Shares (NYSEArca:GLD) reported the second day outflow of 1.2 tonnes to 972.62 Tuesday after 6.5-tonnes Monday, which was the largest in over a month.  This offset its growth of 7.1 tonnes last Friday.

‘This is likely a cautionary function from investors following the strong NFP figure on Friday, who are looking to trim positions with the rate expectation becoming more cloudy.’ the Asian trading desk of Swiss bullion refiner MKS said. 

UK gilt yields hit record lows touching just 0.123% today after Bank of England bond-buying failure yesterday.

Gold prices for UK investors retreated 0.5% to £1,034.01 per ounce as the pound gained 0.49% on the US Dollar to just above $1.30 after dropping below this level for the first time yesterday since the Brexit referendum.

The pound was depressed further yesterday after BOE policy maker Ian McCafferty warned in The Times on Tuesday that further rate reductions and QE may be required. 

 

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