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Gold Price Gains as Stocks Slip, Dollar Whips After Anxious Fed Policy Minutes

April 7, 2016

GOLD PRICES held 1-week highs in London’s wholesale market Thursday, trading 1.2% higher for the week so far after notes from the Federal Reserve’s latest policy meeting showed US policy makers keen to keep Dollar interest rates lower for longer.

The US Dollar fell to 6-month lows against the Euro overnight, but rallied Thursday morning while commodity prices cut earlier gains to drift lower, as did major world stock markets, and gold touched $1239 per ounce.

US Treasury and most other major bond yields meantime fell as investors bought government debt. But Brazil’s 10-year yield leapt 0.3 percentage points to 5.95% following news that a congressional committee advised impeachment proceedings should begin against current president Dilma Roussff for hiding the true size of her government’s budget deficit.

“Headwinds restraining growth and holding down the neutral rate of interest [are] likely to subside only slowly,” said the Fed meeting’s minutes.

“Raising the target range [for Dollar interest rates] as soon as April would signal a sense of urgency [several committe members] did not think appropriate.”

“Like the Grand Old Duke of York, the Fed marched us up to the top of the hill and then down again,” writes ‘perma-bear’ strategist Albert Edwards at French investment bank Societe Generale, saying it was the US stock market’s sharp plunge after New Year which led to the Fed’s “no change” decisions since finally raising from 0% at the last meeting of 2015.

“The minutes failed to bring clarity if a rate hike is due in June,” says the commodities team at German financial services giant Commerzbank, “[but] Fed officials did signal a ‘cautious go-slow strategy’ [and] the gold price reversed some of its earlier decline.”

“Positive fundamentals played out for gold on US Dollar weakness,” says Swiss investment bank Credit Suisse, reviewing the first quarter – and upgrading its average 2016 price forecast by 10% to $1270 per ounce – “driving ETF buying and lifting the price.”

“Silver lacks those fundamentals, but tracks gold upwards,” the note adds, raising Credit Suisse’s 2016 average silver price forecast 6% to $16.26 with a further 3% life for the 2017 outlook to $16.50.

Investor demand for shares in the giant SPDR Gold Trust rose as its price fell with the bullion market Wednesday, the 5th time in the last 7 trading days that the size of the largest gold ETF have moved in the opposite direction to gold prices.

Prior to that, the GLD had moved in opposition to gold prices only 35 times in the previous 100 sessions back to the start of November – the strongest connection since New Year 2009 saw the start of US quantitative easing and zero interest rates.

Chart of GLD bullion backing versus Dollar gold price

Silver prices meantime held Thursday at $15.23 per ounce, erasing all of last week’s 1.1% drop.

The giant iShares Silver Trust (NYSEArca:SLV) ended Wednesday needing 10,411 tonnes of bullion to back its value – the most since the end of 2014.

Washington-based advocacy and trade association the Silver Institute says US sales of silver jewelry grew for the 7th year running in 2015, with retailers reporting 15% growth in the segment from 2014.

Gold Bullion a 'Simple Short' at $1220 on US Fed But Deflation Hits UK, Japan, 'Uncertainty Supports'

April 6, 2016

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GOLD BULLION erased most of yesterday’s 1.8% gain versus the Dollar on Wednesday in London, falling against all major currencies except the British Pound as world stockmarkets held flat but US bonds slipped ahead of today’s release of minutes from the US Fed’s latest policy meeting.

Edging back to $1220 per ounce, gold bullion first recovered this level as a 9-month high in early February.

“Short gold,” says US investment bank and London bullion market maker Goldman Sachs’ analyst Jeff Currie, asked by CNBC to name one simple commodities trade right now.

“Market is pricing in one rate hike [for 2016], Fed has signaled two, data is signaling three.

“Put that together, the market needs to trade interest rates higher. What do higher interest rates typically do to gold? Send it down.”

“The 50-day moving average is currently sitting around $1220,” said the Asian trading desk of Swiss refiner and finance group MKS overnight, “and should act as the first major support.

“Below this $1215 will be a key level.”

With the Yen rising Wednesday near fresh 18-month highs against the Dollar meantime, gold bullion prices for Japanese investors have now retreated more than 7% from early March – the same percentage lost by the Nikkei 225 share index.

The British Pound meantime fell back to $1.40 against the Dollar today, approaching February’s 7-year lows after new data said UK retail store prices fell 1.7% annually in March, with non-food prices deflating for the 36th month in a row.

That buoyed gold bullion prices for UK investors near £870 per ounce, the highest price in 2.5 years when first reached in early February.

With consumer prices in Japan – the world’s fourth largest economy – now struggling to hold higher levels reached in late 2008, “The effect of negative interest rates is very strong,” claimed Tokyo’s chief central banker, Haruhiko Haruda, to parliament yesterday, vowing to “steadily proceed with this policy.”

But Kuroda’s comment “seems to have hardly had any impact in checking the currency’s ascent,” says the daily bullion and commodities note from US brokerage INTL FCStone,

As for gold, and “despite Tuesday’s modest bounce…we have not changed our view and suspect that prices could resume their downturn,” says the note.

“[But] there appears to be enough uncertainty to prop up gold,” counters bullion bank HSBC’s latest gold note, “and the financial markets are no longer focused on the possibility of a near-term Fed rate hike.

“This relieves gold of a major weight, at least for the moment.”

Fresh negotiations over the Eurozone-IMF bail-out of Greece’s government meantime hit yet another impasse overnight, as German chancellor Angela Merkel said there can be no cuts to Athens’ existing bond repayments, while the IMF’s Christine Lagarde said the south-east Eurozone state must enjoy some form of debt relief from its creditors.

Gold Prices 'Bullish' on Technical Analysis & Interest-Rate Outlook as Greek Bail-Out Talks Resume

April 6, 2016

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GOLD PRICES clipped a 1.8% overnight jump in London trade on Tuesday, holding at $1232 per ounce as Western stock markets fell sharply.

Gold priced in Euros touched 3-day highs at €1087 per ounce as Greece’s economy minister George Stathakis said Athens will fail to raise the €50 billion planned from privatizing state assets, with the true figure nearer €15bn.

Greek unemployment slipped in March to a 2.5-year low of 25.6%, the highest in any OECD country, with almost 1-in-2 people aged 16-25 now out of work.

Five years after its debt crisis crippled the economy, more than half of Greek employees would consider working abroad, according to a survey from recruitment firm Randstad Hellas.

IMF and fellow Eurozone-state officials began new negotiations with Athens over its bail-out program on Monday.

Gold’s “solid end of quarter…resembles a bullish engulfing pattern,” says the latest chart reading from Stéphanie Aymes’ technical analysis team at French investment and bullion bank Societe Generale

“More importantly, this pattern took place in the vicinity of the multi-decade channel [rising to $1045 from the 1980 high of $850 per ounce] and the down sloping one since 2013, which gives additional credence to our long-term scenario of gold possibly bottoming out.”

“Spot gold has been correcting lower,” agrees technical analyst Karen Jones in her weekly chart book for German financial services group Commerzbank, “[and] we remain of the opinion that this correction has ended at $1208.

Last Friday’s “weekly close above $1201 has completed a large falling wedge pattern which offers an upside measured target to $1450 longer term.”

Monetary policy “should [also remain] fairly favourable to non-interest bearing precious metals into the medium term,” says analyst Jonathan Butler at Japanese conglomerate Mitsubishi, noting that “by the end of the week the direction of monetary policy in two major economic blocs will become clearer” as the US Fed and then the European Central Bank release minutes from their latest meetings.

Fewer than 1-in-5 contracts for Fed Funds futures now bet that US interest rates will end 2016 at 1.0%, with the probability of no change from the current 0.5% rate rising above 1-in-3.

Shorter term, “The market has now priced out any possibility of an April rate increase,” Mitsubishi’s Butler tells Bloomberg News, “and the doves seem to be winning the day.”

The United States’ trade deficit with the rest of the world widened in February on a jump in imports, new data showed Tuesday, yawning another 2.6% to $47.1 billion.

Shanghai gold prices meantime closed the day at a $4 discount to London quotes on weak trading volumes, deterring new imports to the world’s No.1 consumer nation as the Chinese Yuan edged back on the FX market following yesterday’s Ching Ming holiday.

Chinese-owned ICBC Standard Bank was reclassified Monday as a “market making member” of global trade body the London Bullion Market Association, requiring to quote two-way prices to fellow market makers for large orders throughout London hours.

Gold Prices 'Consolidate' as ETFs Sell, 'Could Test Support' Below $1200

April 4, 2016

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GOLD PRICES edged lower to $1216 per ounce on Monday morning in London, writes Steffen Grosshauser at BullionVault, but held above Friday’s near 6-week low as the US Dollar traded around 5-month lows on the currency markets.

Major government bond prices also slipped, nudging yields higher as European equities gained over 1%.

China’s stockmarkets and the Shanghai Gold Exchange were shut for the Ching Ming festival.

“We could see the markets start coalescing around expectations that the Fed will now put a rate increase back on the table,” reckons US brokerage INTL FCStone’s analyst Edward Meir, “perhaps for some time in May or June

“Gold could fall below $1200 soon and test key double-bottom support at around $1170-1175.”

“We think consolidation could remain the theme in the near-term,” agrees a daily technical analysis from bullion bank ScotiaMocatta, “[but] gold’s uptrend remains intact as it continues to trade above its 100-period [moving average] at $1195.”

Gold rallied almost 17% against the US Dollar in the first 3 months of 2016, marking its biggest quarterly rise in nearly 30 years as expectations of a second interest-rate hike by the US Fed faded.

Chart of US Dollar gold prices, quarterly percentage change

Betting in the futures market today put the odds of “no change” at this month’s Fed meeting – to be held in 3 weeks’ time – above 95%.

Silver meantime moved in a 10-cent range Monday morning around $15.00 per ounce, having suffered a 4% plunge Friday after the release of solid US jobs data.

Brent crude oil eased back to $38.50 a barrel, extending its drop from Friday following remarks by Saudi Arabia’s deputy crown prince doubting a possible deal between major producers to reduce output.

Looking at gold-backed investment trust funds, ETF shareholders “were net sellers last week for the first time in 13 weeks, which could mark a negative swing in sentiment,” notes FastMarkets analyst Boris Mikanikrezai.

The giant SPDR Gold Trust (NYSEArca:GLD) last week shed 5 tonnes of the 181 tonnes added so far this year.

Still needing 818 tonnes to back its shares in issue, however, the GLD remains larger than anytime since March 2014.

The iShares Silver Trust (NYSEArca:SLV) has meantime grown 4.6% since New Year, with a rebound in investor interest taking its silver bullion holdings back to end-2014 levels at 10,344 tonnes.

“It is a long time since commodities have been as popular with investors as they have so far this year,” says a March report from UK investment and retail bank Barclays.

Meanwhile in Asia today, the Japanese Yen strengthened against the US Dollar for a second day, as its best quarter since 2009 raised concerns about the limits of Tokyo’s aggressive monetary easing policy.

The Bank of Japan surprised market participants in January by adopting negative interest rates to curb the currency’s rally.

“What the BoJ has done up until now has run into the end of its ability to impact Dollar-Yen,” says Sam Tuck, senior currency strategist at ANZ Bank.

“The ability of the BOJ to influence the currency is waning.”

Mixed US Jobs Data See Gold Prices Slip vs Falling Dollar, 6-Week Low in Euros as Equities Slump

April 1, 2016

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GOLD PRICES fell to 3-day lows against a falling Dollar lunchtime Friday in London, dropping to $1223 per ounce after stronger-than-expected US jobs data.

Adding 10,000 more jobs than the 205,000 analysts forecast in March, the US economy however showed a 5.0% unemployment rate on the official Non-Farm Payrolls data, just higher from the month before.

Priced in the Euro, gold sank to €1070 – its lowest level in 6 weeks – while Eurozone stock markets extended 2% losses for the day, erasing the week’s earlier gain.

“We expect any gold price drop to be bought into and be relatively short-lived as the rally remains intact,” said a note from London market-making bullion bank HSBC.

“[The] correction is likely to be temporary pause,” agreed a technical analysis from French investment and London bullion bank Societe Generale this week, pointing to what it calls “symptoms of a larger up move” with short-term support at $1200-1206.

“Near-term consolidation continues,” says Canada-based Scotiabank’s New York team, “with gold trading sideways in a zone between $1208 and $1246.”

Further ahead, “We think gold continues to hold more upside potential than downside” they conclude.

After last month’s Consumer Price Index for the 19-nation Eurozone showed a retreat into 0.1% annual deflation, new data today said manufacturing activity across the currency union grew faster than analysts expected in March, but held well below January’s near-2-year high on “weakness in core members” Germany and France.

Meeting for its next interest-rate and QE decision in 3 weeks’ time, “The European Central Bank is likely to see itself forced to continue its ultra-loose monetary policy,” says a note from German financial services group Commerzbank.

“This should be reflected above all in an increase in the gold price in Euros.”

UK manufacturing activity meantime held near February’s near 2-year low, the Markit PMI survey said.

Gold priced in Sterling headed Friday lunchtime for its fourth consecutive weekly fall, trading below £860 per ounce.

China’s manufacturing sector showed its strongest activity since December 2013 on the government’s NBS survey, but continued to shrink for the 13th month running on the Caixin PMI compiled by global data provider Markit Economics.

Service-sector companies reported a strong rebound from the New Year’s sudden drop to 2012 lows.

“No country should devalue its currency to boost exports,” said China’s premier Xi Jinping at a meeting with US president Barack Obama overnight, repeating comments from foreign ministry spokesman Lu Kang, also attending the Nuclear Security Summit in Washington.

The Yuan edged further back Friday from this week’s rise to its strongest FX rate against the US Dollar of 2016 so far, denting an overnight peak in the Shanghai gold premium above the world’s benchmark of London settlement of $2 per ounce – some 50 cents below the average incentive offered to new imports over the last 12 months.

China retained its No.1 spot amongst the world’s gold consumer nations in 2015, said the new Gold Focus 2016 from London-HQ’ed analysts Metals Focus on Thursday, but the separate Gold Survey 2016 from Thomson Reuters GFMS said India re-took its centuries-old crown – one of a series of differences between the gold market’s 2 major reports.

The current wedding season for Muslim couples has seen guests forced to give costume jewelry and electronic goods as gifts, reports the Times of India today from the northern industrial city of Kanpur, thanks to the ongoing strike by the country’s jewelry shops in protest at a new 1% sales tax on gold.

Gold Prices Gain Sharply after "Definite Shift in Tone" in U.S. Fed Rate Policy and Weaker Dollar

March 30, 2016

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GOLD PRICES fluctuated in a $10 range around $1238 per ounce on Wednesday morning in London after sharp overnight gains, buoyed by a weaker U.S. dollar and Fed’s chair Janet Yellen indication that the U.S. central bank should “proceed cautiously” in raising interest rates, writes Steffen Grosshauser at BullionVault.

Gold rallied by almost 2% from Monday’s one-month low, after Yellen said that inflation has not yet proven durable against the looming global risks to the U.S. economy and the deteriorating world growth, striking a more dovish tone than other policymakers who offered last week their support for a further rate hike as early as April.

“Although the baseline outlook has changed little on balance since December, global developments pose ongoing risks,” Yellen said in her speech in New York. “These risks appear to have contributed to the financial market volatility witnessed both last summer and in recent months.”

“Yellen’s comments clearly indicate that the risk of another delay is significant, particularly if economic data were to unexpectedly weaken and/or financial market volatility to increase again,” the financial services holding company Swiss Credit Suisse wrote in a note.

“Talking to traders from the US, it seemed like there was a definite shift in tone overnight, with investors who were not looking at the metal that favourably last week, changing their tune yesterday and looking to square up, or even go long,” noted the Swiss precious metals services provider MKS.

Precious metal experts also see an increasing interest in the metal in Europe, as the negative rates of the European Central Bank have made depositing cash with banks less rewarding.

“Although gold is very much driven by U.S. Federal Reserve (Fed) policy, the impact of ECB policy decisions may become increasingly relevant for gold price action, as concerns about negative interest rates gain traction among investors,” explained Joni Teves, strategist of the Swiss global financial services company UBS.

In other metals, silver tracked gold and traded around a 1-week high of $15.40 per ounce after yesterday’s rebound, whereas base metals fell an average of 0.9% with copper hitting a three-week low.

Brent crude oil slightly cut earlier losses and was around $40.30, after data showed a smaller than expected build in crude inventories.

In contrast, the U.S. dollar index dropped sharply to an eight-day low and yields on 10-year US Treasuries fell to the lowest level in three weeks after the Fed’s cautious signal.

Gold is still this year’s best performing commodity with prices 17% higher compared to New Year level.

Investor holdings in exchange-traded products have expanded by 300 tonnes, although assets in the giant SPDR Gold Trust saw their first drop in two weeks by falling 0.40% to 820.47 tonnes on Tuesday.

Meanwhile, China’s net gold imports via Hong Kong rose 30% in February from a 17-month low on a month-to-month basis, mainly supported by jewellery trade restocking after a strong Lunar New Year and strong investment demand.

Looking ahead, “gold will look to consolidate the overnight gains and hold $1,235-1,240, while $1,250 will provide resistance,” noted MKS Group on Wednesday morning.

“We believe that the Fed’s cautious and accommodative stance will form a generally supportive macroeconomic backdrop for gold and the precious metals in the medium term, by keeping the dollar’s strength in check and keeping the yield environment favourable to non-interest bearing assets,” wrote Mitsubishi precious metals strategist Jonathan Butler, considering how the possibility of a slower rate hike would affect the opportunity cost of holding non-yielding gold.

“In the short term however, gold is susceptible to profit taking and is likely to be moved by the US private jobs data today and the non-farm payrolls on Friday.”

Economic data due today includes the ADP non-farm employment change, the German consumer price index and the GfK consumer confidence reading for the UK.

Gold Prices Hit 1-Month Low vs Rising US Dollar as Fed's Bullard Says 'Rate Hike Coming'

March 25, 2016

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GOLD PRICES rallied 0.5% from a 1-month low in London trade Thursday, going into the long Easter Bank Holiday weekend almost 3% below last Friday’s finish as global stock markets swooned, and bond prices rose, following new comments from a US Fed policymaker on a possible rate hike ahead.

“The next rate increase may not be far off,” 2016 voting member James Bullard of the St.Louis Fed told the New York Association for Business Economics, calling the FOMC’s lower growth and inflation forecasts at the March meeting “relatively minor downgrades.”

After the FOMC failed to hike as hinted last year until December, but now forecasting 2 further hikes in 2016, “Not following through on a proposed action can damage a policymaker’s credibility,” Bullard said.

Gold slumped to $1214 this Easter week even as US Treasury yields – against which gold prices often move in opposition – fell to 2-week lows, with 10-year bonds offering just 1.86% annually to new buyers, unchanged from this point in 2015.

Chart of US Dollar gold price vs 10-year Treasury bond yield

Crude oil lost another 1% after Wednesday’s shock data showed US stockpiles swelling 3 times faster than analysts forecast.

European stockmarkets lost 1.5% and more as traders wound down for Good Friday, and the Dollar continued to tick higher against the Euro currency from last week’s 1-month lows.

Pushing the single currency below $1.1150, that buoyed the gold price for Eurozone investors above €1090 per ounce.

But that was still 6% beneath the 13-month highs hit in early March, just before the European Central Bank raised its QE money creation scheme to €80 billion per month and cut its deposit rate for commercial lenders to minus 0.4%.

Gold priced in British Pounds meantime slipped 4% from this month’s earlier 2.5-year highs above £900 per ounce, holding firmer as Sterling dropped again on the FX market despite stronger UK retail sales data.

“We do not believe further modest rate rises will derail the gold rally,” says investment and bullion bank HSBC’s precious metals analyst James Steel, “[but] they certainly have the potential to knock gold lower, at least temporarily.”

“Gold is starting to benefit from a revival of demand for inflation hedges,” reckons London consultancy Capital Economics, claiming that inflows to gold trust-fund products “[are] offsetting at least some of the downside risks from renewed strength in the US Dollar.”

Having added almost 180 tonnes so far this year to reach 821 tonnes of bullion backing, the SPDR Gold Trust (NYSEArca:GLD) saw demand for its shares unchanged for a second day running on Wednesday as benchmark prices fell 2.8%.

The giant iShares Silver Trust (NYSEArca:SLV) has shrunk 0.5% from this week’s 7-month record as silver prices 3.5%, bottoming overnight at $15.17 per ounce.

That pushed the Gold/Silver Ratio of the two metals’ relative prices back above 80, a 7-year high when reached at the start of 2016.

Australian gold miner Newcrest (ASX:NCM) meantime said Thursday it is “hedging” half-a-million ounces (15 tonnes) of the next 2 years’ output from its Telfer project – “a large scale, low grade mine [where] profitability and cashflow are both very sensitive to the realised Australian Dollar gold price,” according to the company’s statement.

2016’s rising gold prices to date have seen a quick return to gold miner hedging – a strategy for locking in higher prices by borrowing and selling metal now for delivery against that loan using future production – which peaked at the end of gold’s last bear market ending in 2001.

“With the Australian Dollar gold price trading close to 10-year highs,” says the world’s 7th largest gold mining company’s finance chief Gerard Bond, “we saw this as an appropriate moment to lock in the price.”

Gold Price Tests 'H&S Neckline' at $1220, Slides to 3-Week Low on Pre-Easter 'Profit Taking'

March 23, 2016

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GOLD PRICES slid 2.5% to 3-week lows at $1220 per ounce Wednesday morning as the Dollar rose on the FX market and world stock markets crept higher as Brussels police continued to hunt suspects in yesterday’s deadly terrorist attacks.

Government bond prices retreated, and US crude oil lost 1.3% to drop towards $40 per barrel – a 7-year low when reached at the tail-end of 2015.

The Chinese Yuan also slipped further from its strongest Dollar value of 2016 to date, as the International Monetary Fund denied rumors of any “secret deal” between Washington and Beijing regarding FX rates at last month’s G-20 summit of major economy finance ministers.

Gold priced in Yuan still fell 1.5% by the close of Wednesday’s Chinese trade, but the premium offered to new imports from global hub London held at $1.70 per ounce – around 70% of the typical average.

Gold trading volumes in Shanghai’s main contract have so far doubled the daily average from 2015.

“There still seems to be some pressure on [gold] from the Comex April rolls,” said Alex Thorndike at Swiss refining and finance group MKS’s Asian desk overnight, pointing to how speculators wanting to extend their bullish bets in futures and options need to sell March and buy April contracts – pushing current prices down – together with “ongoing position squaring/trimming into the Easter holiday period.

“My guess is we will try back towards the $1225-30 major support zone in the lead up to Easter, but that area should hold.”

“Short term,” says the latest technical analysis from French investment bank Societe Generale, gold prices are “forming a probable [head and shoulders]” – a bullish chart pattern – “and a test of neckline at $1225/1220 looks likely.

“Graphical levels at $1190 will be important support.”

Looking at Tuesday’s brief rise in gold prices after the twin terror attacks in Belgian capital Brussels killed 31 and injured 260, “[that] move was really nothing more than a kneejerk reaction,” says a trading note from London broker Marex Spectron’s David Govett

“The gold market has pulled back sharply overnight…a perfectly understandable and somewhat overdue move as we see profit-taking and book-squaring ahead of Easter, the end of the month and the end of the first quarter.”

Japanese trading firm Mitsui & Co. meantime said it will post its first ever annual loss in 69 years of business, writing down $2.3 billion on mineral projects worldwide.

Mitsui quit the precious metals market at late-2015’s new 6-year price lows, resigning its role as a market maker in the London bullion market and benchmark price auctions.

Gold Bullion Jumps 1.2% as Brussels Attacks Kill 34, GLD Expands at Record Pace

March 23, 2016

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GOLD BULLION recovered most of yesterday’s 1.1% drop against the Dollar in London trade Tuesday as stockmarkets slipped amid news of two terrorist attacks in Brussels, killing 34 people.

The Euro dropped almost 1 cent near 1-week lows against the Dollar before recovering to $1.1226, while European government bond prices gave back an early jump, holding the yield offered to new buyers unchanged from Monday.

10-year US Treasury yields slipped to 1.90%, a new 12-month low when first reached in early February, but still sharply higher from last month’s sudden plunge to the lowest rate since late-2012 at 1.63%.

Commodity prices held flat as New York trade started, with silver retreating to $15.90 from its 3rd pop near 5-month highs above $16 per ounce inside the last week.

“There’s a lot of fear stalking High Streets and Wall Street,” said French investment bank Societe Generale’s head of metals research Robin Bhar to Bloomberg on Monday, noting what he called “very good reasons investors have flocked to gold.”

Expecting the US to avoid a recession, however, SocGen’s analyst said investor inflows to gold would only expand if “[we] see a continuation of the fear trade.”

Looking at consumer bullion and jewelry sales, “You’ve got to be cautious about gold demand,” Bhar went on, “when the two biggest buyers, China and India, are seeing their economies slow, and their appetite for gold diminishing compared to previous years.”

Investor demand for shares in the giant SPDR Gold Trust (NYSEArca:GLD) again grew Monday even as prices slipped, needing more large gold bullion bars to back the trust fund’s stockmarket value.

The GLD has now expanded on 32 of the 54 trading days since New Year – a record run of additions never previously seen since the trust was launched in November 2004.

Chart of GLD gold holdings 12-week percentage change vs. the gold price

The world’s largest silver ETF, the iShares Silver Trust (NYSEArca:SLV), also expanded again yesterday, taking the quantity of bullion held to back its stock above 10,274 tonnes.

Now the largest since December 2014, the SLV’s backing has swollen 7.1% from early February’s 3-year lows.

Tuesday’s drop in the Euro’s exchange rate helped the gold bullion price for German, French, Belgian and other single-currency zone investors rise to €1117 per ounce, a 10-month high when first reached this time in February.

Gold priced in British Pounds jumped fastest, however, adding 2.8% from Monday’s 1-week low at touch £883 per ounce as Sterling fell on the FX market following weaker-than-expected UK inflation data.

Gold Prices 'Consolidate' as Dollar Bounces Post-Fed from 5-Month Low, Silver Speculation Jumps

March 22, 2016

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GOLD PRICES dropped 1% on Monday from their second-highest weekly close in 13 months, writes Steffen Grosshauser at BullionVault, edging down to $1243 per ounce as the US Dollar rallied from its lowest level on the FX market since October.

Asian stocks rose sharply, but Europe and New York equities slipped after finally getting into the black for 2016-to-date for the first time after the US Federal Reserve held Dollar interest rates unchanged last week and cut its forecast of rate hikes from four to two this year.

“[The FOMC’s forecast] should put some downward pressure on the Dollar and hence should be supportive of gold,” reckons Marko Kolanovic at US investment bank J.P.Morgan.

“We think the metal is consolidating at the current level, before testing the next near-term resistance at $1307,” said Canadian Scotiabank’s latest daily analysis, pointing to the gold price high from January 2015.

“Due to the Easter holiday, the market will probably consolidate,” one trader in Singapore is quoted by the newswires, saying that “overall the market trend looks weak but well supported.”

“Investors are likely to do better by betting on gold,” adds Kolanovic, considering the likelihood of Donald Trump becoming the next US president and imposing tariffs against Chinese goods.

“The US Dollar could be under some pressure if you have these types of policies.”

Monday saw the US Dollar’s trade-weighted index against a basket of other currencies hold 0.5% higher from Friday’s new 5-month low.

Brent crude oil meantime traded around $41 per barrel, while base metals led by copper also retreated from an 11-month high.

Thanks to copper miners slashing output, “Silver mining production will fall this year for the first time in more than a decade,” says Bloomberg News, paraphrasing analysis from French investment bank Societe Generale and Asia-focused Standard Chartered, both pointing to how two-thirds of the world’s new silver comes as a by-product from other mining.

Silver has so far gained 14% in 2016, holding firmer than gold at $15.85 on Monday but lagging the dearer metal’s gain of 17% since New Year.

Money managers playing US silver derivatives last week cut their bearish bets to the lowest since mid-2014 ahead of the Fed’s no change decision, taking the “net long” position to its second highest level on record.

Chart of CFTC reported Managed Money positions in Comex silver futures and options

Gold futures and options were less bullish, with hedge funds and other ‘managed money’ accounts trimming their net long position 1% from the previous week’s 12-month high.

Meantime Monday in India – the world’s largest consumer gold market – jeweller trade associations called off an indefinite strike after gaining government assurance that their members will not be “harassed” by the tax authorities in collecting a new 1% excise duty, levied on consumer gold sales by last month’s new Budget.

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