1800 4653 88
Brisbane
Adelaide

Author Archives: City Gold Bullion

'Buyers Beware' as GLD Swells, Gold Price Ignores US Jobs Growth to Hit 13-Month High

March 5, 2016
Latest News
GOLD PRICES set new 13-month highs near $1280 per ounce Friday in London, swiftly recovering a $25 drop after new US data showed stronger-than-expected jobs growth in February.
 
Non-farm payrolls expanded by 242,000 on the Department of Labor’s estimate, almost 30% ahead of consensus forecasts.
 
Average US earnings slipped 0.1% last month, the jobs data said, while the average working week declined to 34.4 hours, the shortest since February 2014.
 
The US Dollar briefly spiked on the FX market, but then fell to new 1-week lows at $1.10 per Euro, while New York’s stock markets hit 2-month highs.
 
Industrial commodities extended their rally, and silver jumped above $15.60 per ounce, gaining more than 6% from last weekend.
 
Gold prices traded 4.3% higher from last Friday’s finish.
 
“NIRP policy ex-US and stickiness in US inflation could push US real bond yields lower,” says a note from US investment bank J.P.Morgan’s global strategist Jan Loeys, referring to Europe and Japan’s negative interest-rate policies and pointing to the rate of interest paid by Treasury bonds after accounting for inflation.
 
“That could further support gold prices, as gold’s best performance has historically occurred during a low and falling US real interest-rate environment, with monthly returns averaging 1.4% compared to the long-run average of 0.4%.”
 
Ahead of tomorrow’s 7th anniversary of UK interest rates being cut to a record-low of 0.5%, gold priced in British Pounds today touched £900 per ounce – a price first seen in November 2010, last seen in August 2013, and still some 25% below the peak of September 2011.
 
Then the world’s largest exchange-traded trust fund by value at that time, the SPDR Gold Trust (NYSEArca:GLD) swelled in size yet again Thursday, with demand for its shares taking the quantity of gold needed to back their value up to 793 tonnes.
 
The GLD has now recovered more than one-fifth of its 53% shrinkage from 2012’s peak gold holding to December 2015’s eight-year low.
 
Adding 150 tonnes since New Year alone, the GLD hasn’t grown this fast since global stock markets bottomed – and central-bank QE began – at the depths of the crash following Lehman Brothers’ collapse.
Chart of the SPDR Gold Trust (NYSEArca:GLD) holdings, 9-week change
 
“Generally I agree with the benefits of owning gold,” says one bullion-bank trader in a note, “[especially given] the current market mindset and rising uncertainties.
 
“I would just remind buyers to beware, the upside is probably a long and winding road. A healthy entry point seems necessary.”
 
The largest silver ETF, the iShares Trust product (NYSEArca:SLV), also grew Thursday, needing its largest 1-day inflow of metal to back the value of its shares for at least 18 months.
 
Adding 169 tonnes, that took the SLV’s silver backing to a 3-month high of 9,946 tonnes, 
 
Shares in Canadian asset manager Sprott’s closed-end silver trust (NYSEArca:PSLV) ended Thursday at a premium of 3.2% to spot prices, the most expensive gap for buyers of the stock since February 2015.
 
The PSLV’s premium to the value of silver it owns peaked above 34% in January 2012, falling to a discount of 1% in mid-2015.
 
US Treasury bond prices meantime fell after Friday’s US jobs news, pushing 10-year yields to 1-month highs at 1.86% per year.
 
Betting on the likelihood of a June rate rise from the US Federal Reserve rose marginally, putting the odds at 36% against 33% yesterday.
 
Odds on a hike at the Fed’s March meeting, however, held below 2%.

Gold Prices Unmoved in 3 Weeks, 'Supported by ETF Investing' as India Stays Shut

March 4, 2016
Latest News
GOLD PRICES edged higher against a weakening US Dollar in Asian and London hours on Thursday, rising 1.8% from last week’s finish as world stock markets held unchanged in quiet trade.
 
Major government bonds held also flat overall, as did commodities.
 
Silver edged up towards $15 per ounce for the third day this week.
 
Gold’s rally, says a note from Dutch bank ABN Amro, has “pushed aside headwinds such as…a higher probability of a Fed rate hike in June, and a rebound in the US Dollar, highlighting the strong upward momentum in gold prices.”
 
Gold prices first reached today’s US Dollar peak of $1245 per ounce 3 weeks ago, trading in a tightening range since then.
 
ABN that day called gold’s price movement a “change in trend”, switching its outlook to bullish the following week having been “long-standing bears”.
 
“The momentum for gold ETFs continues to underpin the spot price,” says refining and finance group MKS, “[and] with fresh inflows yesterday…the influx [is] not looking to slow anytime soon.”
 
Rising for the 3rd session running on Wednesday, shares in bullion-tracker the SPDR Gold Trust (NYSEArca:GLD) saw investor demand expand once more, taking the quantity of gold needed to back the ETF’s stock to the largest level since September 2014 at 788 tonnes – a 5-year low when reached in April that year.
Chart of SPDR Gold Trust (NYSEArca:GLD) tonnes
 
The largest silver-backed trust fund also saw demand for its stock grow Wednesday, but against falling prices, with silver recording a 1-month low at Wednesday’s benchmarking auction in London of $14.82 per ounce.
 
The quantity of bullion needed to back the iShares’ Silver Trust (NYSEArca:SLV) yesterday reached its largest level in 8 weeks at 9,777 tonnes.
 
Meantime in India – the largest household-consumer market for gold – jewelry and bullion outlets “are shuttered,” reports Bloomberg from Mumbai, with retailers and manufacturers striking in protest at Monday’s announcement of gold tax and duty hikes in the 2016 Budget.
 
A nation-wide strike in 2012 “was successful”, Bloomberg says, in preventing the then-government from imposing an excise duty at the point of sale.
 
But the current BJP administration of Narendra Modi – elected in 2014 on a pro-business platform – has now imposed a 1% levy, and “[won’t] be in a hurry to roll back the excise tax as it will be blocking a source of revenue,” the newswire quotes brokerage Inditrade’s head of FX and commodities Harish Galipelli in Hyderabad.
 
Indian gold prices last week fell as low as a $50 per ounce discount to international quotes, thanks to a glut of imported metal and a lack of demand ahead of the Budget, which had been expected to reduce duty, not raise it.
 
Gold prices in China meantime reversed most of yesterday’s 0.9% drop on the Shanghai Gold Exchange, nearing 12-month highs against the Yuan but cutting the premium above international Dollar quotes below 30 cents per ounce – just one-eighth of the incentive typically offered to Chinese importers.
 
Trading volumes in Shanghai’s main gold contract slipped to a 6-session low, but held two-thirds stronger than the daily average of the last 18 months.
 
Gold priced in Euros today held around €1140 per ounce – the new 10-month high reached on Monday – as the single currency edged higher versus the Dollar following stronger-than-expected retail sales data for the 19-nation monetary union plus a rise in jobless benefit claims reported by the US.

Gold Prices 'Consolidating' vs Rising Dollar as US Jobs Surprise, Scrap Sales Grow

March 3, 2016
Latest News
GOLD PRICES held firm against a rallying US Dollar in London on Wednesday, trading above $1230 per ounce as Western stock markets failed to extend a strong surge in Asian equities overnight.
 
After new data Tuesday said US manufacturing recovered a little in February from its worst showing since 2009, private-sector payroll figures from ADP Inc. reported a jump of 214,000 – well ahead of economists’ consensus forecasts.
 
The US government’s estimate of non-farm payrolls growth in February will be released Friday.
 
Commodities paused after the recent 30% jump from 13-year lows in crude oil, and silver prices also held flat below $14.90 per ounce, while major government bond prices retreated, nudging 10-year US Treasury yields near 1-month highs at 1.85%.
 
“If the world economy and financial system is indeed heading for the rocks,” reckons London-based Capital Economics, “an extended period of looser monetary policy and strong demand for safe havens should boost the precious metal further.”
 
The odds of a US Federal Reserve rate-rise to 0.75% at the mid-March meeting now stand below 1-in-50, according to futures trading, down from 1-in-6 a month ago.
 
“However, we suspect that a new factor – the return of inflation – will also be increasingly important [and] any correction in the gold price will be short-lived,” the consultancy concludes, repeating its end-2016 forecast of $1250 per ounce.
 
Wholesale bullion trading “could continue to see some profit-taking and the market slip back,” says a note from brokers Marex Spectron in London.
 
But “consolidation remains underway,” counters a technical analysis of price charts from Canadian bank and London bullion market maker Scotiabank.
 
Consolidation should be seen “in a positive light,” agrees the latest Bullion Weekly Technicals from German financial services group Commerzbank, repeating that February “saw the market break through the 2014-2016 downtrend at $1200…
 
“[Now] we are seeing the market hold sideways below $1263.50” – the early February high for Comex gold futures contracts.
 
Meantime in India – the world’s largest consumer gold market – “most jewelry showrooms remained closed” on Wednesday reports Rediff, as the industry protested this week’s new 2016 Budget tax hikes on gold imports and sales. 
 
“The proposed excise duty will lead to a drastic fall in business,” says Surinder Kumar Jain, vice-president of the All India Sarafa Association, which had previously supported the BJP government’s policy of trying to curb gold imports by offering deposit and bond schemes – schemes further favored with the exemption of capital gains tax in Monday’s Budget.
 
“Scrap imports from Asia [to Italy and Swiss refiners] have boomed,” says the latest gold note from precious-metals analysts Metals Focus, reporting that 2015’s decline on falling prices has “all changed”.
 
“Domestic volumes responded strongly to prices breaching €36 per gram” in late February say refining industry contacts, Metals Focus reports, pointing to €1120 per ounce – a price last seen by European scrap dealers and refiners in April last year when gold failed to recover its sudden spike of last New Year 2015.

Gold Bullion Sets 13-Month Euro High as China Manufacturing Shrinks, Crude Oil Recovers 33%

March 2, 2016
Latest News
GOLD BULLION came within $6 per ounce of last week’s 12-month US Dollar high in London on Tuesday, setting a fresh 13-month high for Eurozone investors as world stockmarkets rose again and crude oil extended its recovery to 33% from last month’s 13-year lows.
 
As gold priced in Dollars touched $1247, bullion in Euro terms set its highest spot price since late-January 2015 above €1147.
 
Germany’s Dax index of Frankfurt stocks meantime recovered start-February’s level, some 10% above last month’s 18-month lows, after new data said manufacturing activity in the 19-nation Eurozone is holding firmer than expected, while unemployment has fallen to 4-year lows.
 
China’s manufacturing PMI, in contrast, gave the weakest reading since late 2011, with both the NBS and Caixin surveys pointing to contraction.
 
Turnover in the Shanghai Gold Exchange’s main contract held at more than twice the last 18 months’ average, but slipped to two-thirds of last Thursday’s new all-time record with contracts worth some 45 tonnes of bullion changing hands.
 
“The lowest Chinese manufacturing PMI since Nov 2011…saw the metal drop sharply,” says a note from Swiss refiners MKS, but “it was very short lived…with bargain hunters quick to step in.”
 
The Yuan held firm on the FX market after Monday’s cut to Chinese banks’ reserve requirement ratios – the fifth such cut in a year, aimed at spurring new lending – capping the Shanghai gold premium at 50 cents per ounce above London quotes.
 
One jewelry trade body in India – the world’s No.1 consumer market for gold – today called an indefinite strike in protest at the new 1% excise, announced in yesterday’s 2016 Budget and added to the 10% import duty which the industry had hoped would be cut.
 
Japan’s government meantime borrowed 10-year money today at a negative rate of interest for the first time ever, with a sale of new bonds paying buyers -0.024% annually if held to redemption in 2026.
 
Major government bond prices worldwide eased back in price as equities rose, nudging 10-year US Treasury yields up to 1.75%.
 
The first time US yields fell to this level, gold traded at record highs above $1900 per ounce.
 
Chart of gold prices versus 10-year US Treasury yields
 
“We believe that the recent sharp rally in the gold price is a selling opportunity,” says a note from commodity strategist Jesper Dannesboe at French investment and London bullion market-maker Societe Generale, calling the move “unsustainable”.
 
“The gold price appears to be discounting no further Fed rate hikes this year and very little tightening next year [but] our economists expect the US economy to withstand the slowdown in emerging markets.”
 
Commodity prices meantime extended their rally on Tuesday, taking Brent crude oil back to $37 per barrel – fully one third above January’s new 13-year lows.
 
Silver prices also rose, but failed to hold above $15 per ounce – a level reached on the way up in late 2007, but lost in late 2014 and again a year later.

Gold Prices 'the Biggest Story of 2016' as Comex Speculators Drive Biggest Jump in 4 Years

March 1, 2016
Latest News
GOLD PRICES cut into overnight gains lunchtime Monday in London, writes Steffen Grosshauser at BullionVault, but kept February on track for the sharpest month-on-month rise in Dollar terms since January 2012 as world stockmarkets fell following the G20 meeting of political and central-bank leaders from the world’s biggest economies in Shanghai.
 
European shares retreated from a three-week high after the G20 meeting failed to propose any coordinated stimulus, merely agreeing at the weekend to use “all policy tools – monetary, fiscal and structural – individually and collectively” to support growth.
 
“Markets looked at the G20 meeting and found it a tad disappointing, what they had been looking for was a unification of the G20 to do something as a force,” said Peter Lowman, CIO of Investment Quorum, a London-based wealth management firm.
 
Having been sold lower on Friday’s US economic data, gold prices were lifted by Chinese traders Monday morning, says the Asian desk of Swiss refiner and finance group MKS.
 
Over in India – the world’s largest consumer market – local gold prices surged 1.4% against the Ruppee on Monday after Finance Minister Arun Jaitley surprised the market by maintaining gold import duty at the current record level of 10%, despite pleas for a reduction from the jewelry industry.
 
Holding around $1230 per ounce for London settlement, wholesale gold prices have risen more than 10% in February, the largest monthly jump in more than 4 years.
 
World stock markets, in contrast, headed for their third monthly drop in succession.
 
“Gold has been the biggest story of this year,” says Dan Denbow, portfolio manager at the USAA Precious Metals & Minerals Fund.
 
“Last summer, people were calling it a barbaric relic, and nobody could care less about gold. Now, it’s slowly generating more and more buying.”
 
New data released Friday showed  speculators in Comex gold futures and options growing their bullish bets and slashing their bearish bets as a group over the week-ending last Tuesday.
 
That took the “net spec long” position to its second largest since November 2012.
Chart of Comex gold speculators' futures and options position
Global holdings in gold-backed trust funds have meantime risen 15% so far in 2016, recovering from the 6-year lows hit as prices fell late in 2015 with the largest quarterly inflows since 2010.
 
Silver followed gold prices and rose to $14.80 per ounce on Monday morning, after it dropped to a 3-week low of $14.69 last Friday. 
 
However, “the picture certainly looks less rosy for silver, as it is currently sitting at the top end of the falling wedge that it had broken out from two weeks ago,” wrote bullion bank Scotia Mocatta in a technical analysis after Friday’s close.
 
“Should silver drift lower and fall back into the wedge next week, we think it could break silver’s uptrend and also cast a bad omen for gold.”
 
The Japanese Yen – often seen as a “risk off” asset – was meantime set for its biggest monthly gain since 2008, while China’s Yuan fell Monday for the seventh day in a row.
 
Brent crude oil remained around $32.50 per barrel after it rallied last week on expectations that top producers would cut their output.
 
Oil prices have now fallen around 70% from their mid-2014 high.

Gold Bullion Holds 2016 Jump as Deutsche & CNBC Say 'Buy', Asian Traders 'Mostly Sellers'

February 26, 2016
Latest News
GOLD BULLION held above $1230 per ounce in Asian and London trade Friday morning, on track to reverse most of last week’s 0.9% drop as European stockmarkets followed China higher.
 
Commodity prices rallied for a second day as major government bond prices eased back, but silver headed for its second weekly fall in a row at $15.13 per ounce.
 
Priced in the US Dollar, gold now stands 18% higher from December’s 6-year lows, gaining more against all other major currencies except the Japanese Yen and the Euro.
 
Bullion priced in Sterling has gained 27% since then, and it has reversed all of the 2013 price crash against the currencies of 8 from the largest 10 gold-mining nations worldwide, including No.2 Australia.
 
 
Even against the fast-rising Yen gold has risen 10% since New Year, with a 14% rise versus the single currency Euro.
 
“It’s time to buy gold,” says one report of German financial services group Deutsche Bank’s latest view, adding that it sees “rising stresses in the global financial system.
 
“Buying some gold as ‘insurance’ is warranted.”
 
Celebrity trader Pete Narajan yesterday bought shares in the Market Vectors Gold Miners ETF (NYSEArca:GDX) says CNBC, where he co-presents the Half-Time Report.
 
Launched a decade ago, the GDX has now risen 55% in the last 5 weeks, rallying off fresh all-time lows to reach its highest price in more than 8 months.
 
A broader rally in mining shares helped European stock markets touch 3-week highs Friday morning, newswires report.
 
Gold-related investment funds this week saw their biggest cash inflows since 2009, according to data from Bank of America Merrill Lynch. 
 
The CME futures exchange yesterday raised the downpayment asked of speculative traders to $4,950 per 100-ounce contract – equal to 4 cents on the Dollar, and now raising the initial margin on these leveraged derivatives some 23% above end-2015‘s six-year low.
 
Options contracts on those Comex gold futures have given “the biggest bang for the buck” in 2016, says Reuters, with bullish calls betting that gold will hit $1300 per ounce by April rising 1343% since New Year.
 
“The price for the $1400 strike option has risen 667%.”
 
Wholesale traders in the Middle and Far East, in contrast, “are mostly sellers as gold in local currencies is sky high,” says one London bullion bank’s sales desk in a note.
 
But while “capping gold’s upside [that is] not disrupting the momentum. Gold rocks.”
 
The rally since New Year is “just pure risk and fear,” Bloomberg quotes Wayne Gordon, executive director for commodities and forex at Swiss bank UBS’s wealth management division.
 
“People are unduly worried.”
 
Beijing’s politburo has “room” to support the Chinese economy if needed, said People’s Bank of China chief Zhou Xiaochuan overnight at a conference for G20 financial leaders in Shanghai, but “the direction [to reform and rebalance] is not changed” and the PBoC will maintain “prudent monetary policy.”
 
Bank of England chief Mark Carney meantime warned the G20 meeting that negative interest rates – now applied by the Swiss, Swedish, Eurozone and Japanese central banks – are a “zero-sum game” for global growth, threatening a “beggar-thy-neighbor” currency war of competitive devaluation to try and boost export sales.

Gold Trading Explodes to Record in Shanghai, Peak 2011 Level in Comex Call Options

February 26, 2016
Latest News
GOLD TRADING held wholesale prices above $1230 per ounce in Asia and London on Thursday morning, with volumes in China’s bullion market setting a new record as the Shanghai stock market closed sharply lower but European equities rallied.
 
With gold prices trading 16% higher against both the US Dollar and Chinese Yuan since 1st January, China’s main share index tday sank 6.4%, its worst 1-day in a month, while commodity prices gave back a third of Wednesday’s late recovery.
 
Gold trading volumes in Shanghai today jumped to a new all-time record, with Dollar-equivalent prices in the world’s largest mining producer and importer moving above London quotes for the first time this week, offering a gross margin of $1.30 per ounce on new shipments – barely half the 18-month average.
 
Data released overnight showed gold imports to China through Hong Kong sank as prices rose in January, falling 85% from December to the lowest level since 2011 according to Bloomberg data, despite the approach of the key Lunar New Year shopping season.
 
Some CNY18 billion-worth of the Shanghai Gold Exchange‘s main Au(T+D) contract changed hands on Thursday, trading some 70 tonnes of bullion.
 
Until Thursday, “The SGE had remained in discount for the entire week,” notes the Asian trading desk of Swiss refinery and finance group MKS, “and it seemed like some Asian investors were happy to capitalise on [this week’s] higher prices.”
 
Trading in the New York-based Comex’s gold call options meantime – a highly leveraged bet that prices will rise – has jumped in February to its highest daily average since prices peaked above $1900 per ounce in September 2011, the Wall Street Journal notes in a chart.
 
“It shows how bullish people are on gold,” the WSJ quotes one derivatives strategist at a broker-dealer.
 
The world’s largest exchange-traded trust fund at its 2011 peak by value,  the SPDR Gold Trust (NYSEArca:GLD) has now grown 18% by shares outstanding since New Year, needing an extra 118 tonnes to back its value – the sharpest 8-week inflow since July 2010, when the Greek debt crisis first began making headlines worldwide.
 
“The move in gold,” reckons Swiss bank Credit Suisse’s global head of FX strategy Shahab Jalinoos, speaking to Bloomberg, “captures the idea that interest rates are going to be very low in all the major countries, including now the United States, which is a big change from the end of last year.”
 
“China’s interest in buying gold from Hong Kong cooled a lot last month,” the newswire also quotes Shanghai analyst Wang Rong at Guotai & Junan Futures Co., “because of [high prices due to] exchange rate factors.
 
“Purchases in December were so high that they probably anticipated demand in January.”

'Risk-Off' Gold Bullion Jumps as Stocks Slump with Crude Oil, Bond Yields Sink

February 25, 2016
Latest News
GOLD BULLION jumped even as the US Dollar rose Wednesday, reaching new multi-month highs against the Euro, Sterling and Swiss Franc as Western stock markets sank again with crude oil prices.
 
US oil contracts reversed the week’s earlier gain, whipping more than 3% for the 21st session out of just 36 so far in 2016.
 
Gold priced in Dollars touched $1251 per ounce in the wholesale bullion market, just $10 below this month’s spike to 1-year highs.
 
Gold bullion meantime set new 10-month highs in the Euro above €1135, and shot within £2.50 of £900 per ounce against the British Pound as the UK currency slumped to new 7-year lows amid the Brexit debate.
 
That level was first seen in November 2010, some 10 months before the current all-time high of £1195, and last seen in September 2013.
 
“Would we like higher gold price? Yes,” says USAA Precious Metals & Minerals Fund assistant vice-president Dan Denbow.
 
“[But ] will the rest of your portfolio like it? Probably not.”
 
“You’ve got the physical story,” says investment, retail and bullion bank HSBC’s head of FX strategy Daragh Maher, referring to what his colleague James Steel believes to be growing Asian demand, “and now you’ve got the risk-off story” in financial assets.
 
“Gold doesn’t yield. Who cares? Nor does Germany.”
 
German 10-year Bund yields offered new buyers just 0.17% per annum Wednesday lunchtime in Frankfurt as prices rose again.
 
Swiss 10-year yields meantime sank to new all-time lows of minus 0.4% per annum.
 
“[There’s] a resurgence of bullish sentiment,” say another bullion bank’s analysts, but with prices jumping so sharply from late 2015’s new 6-year lows so far in 2016, “buyers and sellers [are] fighting fiercely for control.”
 
Over in India – world No.1 gold consumer market – “Discounts in the physical market have been larger than the duty cut expectations,” writes fund manager Chirag Mehta of Quantum AMC in the Economic Times, referring to anticipation that next Monday’s government Budget will reduce import tariffs of gold bullion from the current 10%, but also the $50 per ounce discounts to world prices being offered by retail dealers thanks to a stockpile glut and weak demand. 
 
Looking to tap trading in the currency of China, the world’s No.1 gold miner and importer, Hong Kong Exchanges & Clearing – which owns the London Metals Exchange, where Europe’s last major “open outcry” market was recently moved to new facilities – said Tuesday it plans to launch Yuan futures against a range of other currencies, plus a Yuan-denominated gold contract, later in 2016.
 
“The cluster of all these currency instruments hopefully will create an eco system for China to say there is an offshore market that you can trade,” Bloomberg quotes HKEX chief executive Charles Li.
 
Prices on the mainland’s Shanghai Gold Exchange today rose another 0.3% against the Yuan by the close of Chinese trade, but the key contract finished at a discount of 75 cents per ounce to London quotes.
 
That gap is typically a premium, averaging $2.50 per ounce over the last 18 months and directly incentivizing new imports of gold to the world’s second-largest economy.
 
Trading volume in the much-trumpeted “international” Shangahi gold contract iAu9999 – launched in late 2014 – today equaled just 0.0005% of the main T+D contract, having collapsed after briefly eclipsing the SGE’s key onshore product in Spring 2015.

Gold Price Rebounds as Stocks, Crude Oil Reverse Gains, UK Brexit 'Not a Tail Risk'

February 24, 2016
Latest News
GOLD PRICE losses of 1.7% from yesterday were reversed in Asian and London trade Tuesday, taking the metal back above $1220 per ounce as world stock markets reversed Monday’s rally, as did crude oil.
 
The British Pound slipped again near 7-year lows on the currency market as CEOs and directors from 34 of the largest 100 companies listed on the London Stock Exchange called for UK voters to stay in the EU, avoiding Brexit.
 
The LBMA gold price today set a new 13-month high for UK traders at the morning auction, fixing above £863.46 per ounce – just 2 pence shy of January 2015’s then 16-month peak.
 
“If you think the Brexit risk is not such a ‘tail-risk’,” says one bullion bank’s salesdesk, using a term for low probability events, “then it may make sense to add diversification to a balanced portfolio…despite the current perception of rich prices.”
 
For Dollar gold prices, “2015-2016 resistance line should now offer support circa $1197,” says the latest Bullion Weekly Technicals from Commerzbank’s chart analyst Karen Jones.
 
“Gold defended its territory yesterday despite rising stock markets and a firmer US Dollar,” adds the German financial services group’s commodities team.
 
“We still maintain our view that gold needs to be traded inversely against both US stocks and oil,” says Ed Meir at US brokerage INTL FCStone, “as these two complexes seem to be the dominant variables.”
 
The quantity of gold needed to back shares in the SPDR Gold Trust (NYSEArca:GLD) rose yet again Monday, reaching an 11-month high of 752 tonnes – some 45% below end-2012’s peak – but marking only the 6th addition so far this year on a day when gold prices fell.
 
The opposite – of rising prices seeing an outflow from the GLD – has only happened once, on 6 January.
 
February’s surge in world gold prices – the strongest since August 2011 on a daily average basis – has badly dented imports to world No.1 consumer market India, Reuters quotes “sources”, perhaps knocking inflows two-thirds below January’s level as local retailers struggle to offload inventory even at $50 per ounce discounts to world prices.
 
The world’s larget minerals business, BHP Billiton today slashed its interim dividend to shareholders by 75% after reporting its first half-annual loss in 16 years, predicting still “weaker prices and high volatility” to come for iron, copper and oil.
 
South Africa’s 3rd largest gold producer, Harmony (JSE:HAR) today said it’s locking in the current record-high price of bullion in Rand terms on one-third of this year’s expected output, hedging its currency risk against the US Dollar to cover $400 million of sales.

Gold Price Drops 2% as Stocks, Oil & Dollar Rally, Sterling Sinks on Brexit Date

February 23, 2016
Latest News
GOLD PRICES sank 2% on Monday from last week’s close, dipping near $1200 per ounce as crude oil stabilized, world stock markets rose, and the US Dollar surged on the currency markets thanks to a plunge in the British Pound ahead of the UK’s Brexit vote on EU membership, now scheduled for 3 months’ time.
 
“Uncertainty over the result of the ‘Brexit’ referendum on June 23rd could see further losses in Sterling,” notes Jonathan Butler in London for Japanese conglomerate Mitsubishi, “which could help strengthen the Dollar and keep USD-denominated precious metal prices on the defensive.”
 
Gold priced in British Pounds today slipped but then rallied back to £860 per ounce, its closing level from Friday and the fastest 7-week gain at 20% so far in 2016 since the peak of the financial crisis amid English rioting in August 2011. 
 
“Today sees stocks sharply higher,” says David Govett at London brokers Marex Spectron, “[with] oil above $30, the Dollar up and guess what? Gold is down $22.
 
“I reiterate, gold is following other markets…Attempting to predict where gold will go on its own merits is pointless, despite some people’s slavish devotion to technicals and fundamentals.”
 
Friday’s technical analysis of gold price charts from Canadian bullion bank Scotia Mocatta called last week’s “slightly lower close at $1231…further support to our view that gold indeed broke out the falling wedge formation that had kept the metal in a downward trend since mid-2013.
 
“Should gold surpass our near-term target of $1305,” says Scotia – pointing to the January 2015 high in Dollar terms – we expect the metal to close in on its 200-week moving average, currently at $1344.”
 
Looking at external factors, “Expectations surrounding interest rate hikes in the US and interest rate reductions in Japan and Europe have on net been positive for gold,” says French investment and bullion bank Societe Generale’s analyst Robin Bhar.
 
“Recent fund managers’ surveys show investors want capital preservation, as evidenced by the preference for cash, bonds, gold and defensive stock sectors such as telecoms.”
 
Japan’s policy of negative interest rates on central bank deposits has “sparked a public outcry,” reports the Wall Street Journal, as “lawmakers say it victimizes consumers and sends a message of despair.”
 
Friday saw yet another net inflow of gold bullion needed to back shares in giant ETF the SPDR Gold Trust (NYSEArca:GLD), taking the fund’s holdings to a 9-month high of 713 tonnes.
 
Latest data released by US regulator the CFTC meantime showed bullish betting on Comex gold futures and options rising once more in the week-ending last Tuesday, but conviction remaining far below historic averages.
 
Measuring the number of bullish against bearish bets held by all non-industry players, the ratio last week rose to its highest level since October at 2.9.
 
The 20-year average, in contrast, sits above 20 bullish contracts for every 1 bearish bet.
 
Silver betting, on the CFTC data, has become much more heated, with the ‘Managed Money’ category of traders holding a larger number of bullish contracts only 10 times in the last decade, 5 of those since the 2013 price crash.
 
Silver prices today fell through the $15 level for the first time in almost 2 weeks, sinking 1.7% at the start of London trade before recovering to $15.15 per ounce – some 9% higher for 2016 to date.
 
But that still left the Gold/Silver Ratio of the two precious metals’ relative prices at a 7-year high above 80 ounces of silver per 1 ounce of gold.
older newer