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Selling Pressure 'Slowing' in Wholesale Gold Bar Market as Price Holds 6-Year Low

November 19, 2015
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GOLD BARS traded in the global wholesale market held above yesterday’s near-6 year lows Wednesday in London, as Western stock markets recovered earlier sharp losses and the US Dollar edged back on the currency market ahead of today’s release of notes from the Federal Reserve’s latest “no change” policy meeting in October.
 
Rising $5 per ounce to $1070, gold traded in large, professional-market accredited bars yesterday marked “the 21st trading day in the past 24 sessions [of] showinga ‘Down Day’ in North America[n trade],” says a technical analysis from bullion bank Scotia Mocatta’s New York team.
 
British Pound gold prices today held £10 per ounce above end-July’s 5.5-year low of £693 – a level first crossed in November 2009 on the way up.
 
Priced in Euros, wholesale gold bars briefly touched last Thursday’s 5-week low at €1000 per ounce – some 16% above the low set by the crash of 2013.
 
Gold price in Euros, 5 year chart, high-low-close
 
Eurozone bond prices edged higher Wednesday, pushing borrowing rates down for states everywhere in the 19-nation currency zone except Greece, which saw 10-year yields rise again from last week’s 1-year low to 7.25% per annum.
 
Germany today raised €4.37 billion in 2-year loans at a record-low interest rate of minus 0.38% per year.
 
“Gold Forwards have moved into backwardation on the front-end of the curve,” says one London bullion bank sales-desk, with “physical demand helping” to raise nearer-term gold prices above contracts for settlement up to 2 months away.
 
Exchange-traded trust funds enabling investors to track gold prices “have [meantime] started adding gold again,” the note goes.
 
“It feels like selling pressure in the [wholesale gold bar] market is softening [and] there surely is a level at which to enter.” 
 
Chinese “consumers are buying more gold because of the price,” said half-million ounce gold miner Oceanagold’s CEO Mick Wilkes to Reuters at a conference in Manila today.
 
“I think …the country’s demand for gold and [China’s state] gold reserves will continue to grow.”
 
But “I just don’t think it’s a demand equation that’ll make a big impact” on prices, Jake Klein of fellow half-million-ounce Australia-based gold producer Evolution Mining Ltd. told a Bloomberg conference in Sydney.
 
“Yes there’ll be increased physical demand, but the gold market is so dominated by financial issues, inflation and the US Dollar, that it’s not going to make a huge difference.”
 
Silver wholesale bars meantime fell near new 6-year lows in London trade Wednesday, touching $14.08 per ounce – just 8 cents above late-August’s low.

Gold Bullion Sets New 6-Year Low Sub-$1080 at London Benchmark, Speculators Turn Tail

November 18, 2015
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GOLD BULLION set a fresh near-6 year low at the global benchmark LBMA Gold Price in London on Tuesday afternoon, slipping again as world stock markets rose with the US Dollar, and industrial commodities set new half-decade lows of their own.
 
Clearing on weak demand at a level below $1080 per ounce for the first time since mid-February 2010, gold bullion’s benchmark price – as set by physical demand and supply at 3pm in London – has now shed 10% against the Dollar since the last Fix of 2014.
 
The Dollar meantime pushed the single Euro currency down today to its lowest level since mid-April – the height of the latest Greek debt crisis – at $1.0670.
 
That stemmed the drop in Euro gold prices at €1010 per ounce, holding 0.4% stronger for the week so far but more than 1% below Monday’s early 2-week high as Asian gold trading opened after the weekend’s terror attacks in Paris.
 
The French stock market rose over 2%, leading a strong session in Europe after Hong Kong and Tokyo had also closed sharply higher.
Managed money category, CFTC gold futures & option net long position
 
New data Monday from US regulator the CFTC – delayed by last week’s Veterans Day holiday – said that the 8% drop in gold prices between mid-October and last week coincided with an 80% drop in the net bullish position held by hedge funds and other ‘managed money’ accounts in Comex gold futures and options.
 
Speculators in silver futures and options meantime cut their net long position at the fastest pace since end-July’s new 6-year price lows, reducing the balance of their bullish over bearish bets by 35% as the metal dropped 5.4% – the fastest Tuesday-to-Tuesday price drop since November 2014 marked what were then new half-decade lows in the price.
 
After shedding metal on last month’s price pop however, the giant iShares Silver Trust (NYSEArca:SLV) yesterday added more metal to the bullion held to back its exchange-traded stock, taking the total back to 9,867 tonnes – a 3-year low when first reached in mid-October.
 
Fresh rises in US Treasury bond yields on Tuesday saw the price of all Washington’s conventional debt with a maturity longer than 1 year trade below par, according to Bloomberg data.
 
Average UK house prices rose in September to a new all-time record, government data showed today, accelerating to 6.1% annual growth and with the typical London home-buyer now earning a six-figure salary (equal to $160,000) for the first time.
 
One week after Greece’s first anti-austerity strike since the Syriza Party won power on an anti-bail-out ticket in January, Athens today secured the next €12 billion of bail-out loans from its fellow Eurozone member states – over 80% of which will go to commercial banks, still having to enforce capital controls limiting retail customers to €60 per day withdrawals ($64).

Gold Price Erases 'Safe Haven Gain' with Crude, Silver After Paris Terror Attacks

November 17, 2015
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GOLD PRICE gains of almost $15 per ounce faded in London trade Monday, with the metal erasing what analysts and news-wires called “safe haven demand” after the weekend’s terrorist attacks in Paris killed 129 civilians.
 
Western stock markets reversed their earlier drop, but US Treasury bond prices rose with the Dollar, edging the yield offered to new buyers lower again.
 
Ten-year US yields slipped to 2.25%, almost a quarter-point higher from this time last month but just below where they stood a year ago.
 
By mid-afternoon in London, the Dollar gold prices held at $1085 per ounce – barely $1 above where it ended Friday before the Paris atrocities began.
 
Crude oil gave back an earlier bounce from near-3 month lows, while silver prices tracked gold higher and lower, also erasing an earlier 1.4% rise in Asian and early London dealing which had reached $14.46 per ounce.
 
“The terror attacks in Paris sparked safe-haven demand” for gold, reports the Wall Street Journal.
 
“Investors sought safety in the metal following Friday’s deadly attacks,” agrees Reuters, with Bloomberg also saying that the terrorist attacks in Paris “spurred haven buying.”
 
“Gold is clearly profiting from its reputation as a ‘crisis currency’,” said a note from Germany’s Commerzbank this morning, pointing to the rise in Euro gold prices during Asian trade above €1020 per ounce – a move of 1.8% from Friday’s finish.
 
“Safe-haven buying has taken gold higher this morning,” agreed the Asian dealing-desk of Swiss refiner and finance group MKS, noting that Comex gold futures contracts – typically settled for cash, not metal – saw 11,000 lots change hands on the electronic Globex platform before China opened for business.
 
Half of Friday’s very low volume, that equaled just less than 8% of last month’s daily average turnover – itself down 14% from the same month last year.
 
Shanghai’s official Gold Exchange then saw volume in its key gold contract rise sharply from Friday, nearly matching last Monday’s 2-week high as Yuan gold prices edged 1.0% higher for the day.
 
Demand at the mid-morning London benchmarking auction, the LBMA Gold Price, jumped to 5.7 tonnes – the highest since late August, and almost 5 times the volume seen Friday – at an opening suggestion some $10 above Friday’s price.
 
The LBMA Gold Price then settled almost $4 higher again to find a balance  between demand and supply, fixing at $1094.50 per ounce – the highest benchmark since Monday last week.
 
New trade data meantime showed former world No.4 consumer nation Turkey importing only 1.7 tonnes of gold last month, down almost 75% from a year before.
 
World No.1 consumer India – which had overtaken China’s demand over the first 9 months of 2015 according to specialist analysts Thomson Reuters GFMS – showed a 60% drop in October imports by value, dropping to equal 45 tonnes at last month’s average afternoon LBMA Gold Price.

Gold Bullion 'Looks for Respite' After 'Finding Support' at 6-Year Low Ahead of Fed Rate Decision

November 14, 2015
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GOLD BULLION lost a brief $6 pop in mid-afternoon trade Friday in London, heading for a 0.6% weekly drop but holding above yesterday’s new 69-month low of $1174 per ounce.
 
After various Federal Reserve policymakers said overnight they’re minded to raise Dollar interest rates from 0% for the first time since 2008 at the December meeting, new data today showed US retail sales and producer prices both weaker than analysts forecast.
 
Consumer confidence has risen sharply in November however on the Reuters/Michigan survey, reaching its best level since June.
 
US bond prices rose again Friday, nudging market interest rates, as Western stock markets fell once more.
 
Crude oil fell to the lowest price since August’s 6-year trough beneath $40 per barrel after Thursday’s data showed US stockpiles surging to a record quantity.
 
“Gold will be targeting $1090 and $1095 on the top-side,” says the Asian trading desk at Swiss bullion refining and finance group MKS, “as the metal looks for some respite following the recent weakness.
 
Yesterday’s low – variously put by spot-price charts around $1072-74 – “is a major support,” MKS adds, “and any breach of this level sees $1050 as a real possibility.”
 
“The metal’s brief piercing below [July’s $1177 low] suggests this support has temporarily stopped the fall,” reckons Reuters technical analyst Wang Tao, adding that “a bounce could be due.”
 
Further ahead, “Increased volatility and price swings with lower liquidity into the year-end…could propel gold back above $ 1110,” says a bullion-bank sales desk in a note.
 
While it can’t “rule out more gold weakness” going into the US Fed’s December decision, “it seems the market is already massively positioned [and] a rate hike will see short-covering profit-taking.”
 
Major Hong Kong jewelry retailer Luk Fook (HKG:0590) yesterday joined Chow Tai Fook (HKG:1929) – the world’s largest jewelry outlet chain – in warning that profits fallen sharply over the last 6 months, perhaps by 40%, thanks to a drop in sales and margins.
 
Beijing’s new official target growth rate for GDP, plus the end of China’s “one child policy” for families, “should have a positive impact on the country’s demand for gold and silver,” says analysis from metals specialists Thomson Reuters GFMS, “if these measures are implemented and executed successfully.”
 
However in India – the world’s heaviest gold consumer market in Q3 according to new data this week from market-development organization the World Gold Council – the peak demand festival of “Diwali is over,” notes an email from investment and bullion bank ICBC Standard Bank, “and Indian dealers will not be in a hurry to restock looking at a chart of gold [trading 6% above the summer’s 4-year lows] in Rupees.”
 
Favored by US fund managers meantime, the number of gold-backed shares issued in the SPDR Gold Trust (NYSEArca:GLD) – the world’s largest exchange-traded product by value at gold’s peak in summer 2011 – yesterday shrank to a new 7-year low, taking the bullion needed to underwrite the fund down beneath 662 tonnes from the end-2012 peak by weight of 1353.
 
Shrinking for the 11th session in 3 weeks, the GLD has now seen the longest run of outflows since November last year.
 
Silver holdings, in contrast, rose at the iShares Silver Trust (NYSEArca:SLV) on Thursday, adding metal to back the fund’s exchange-trade shares for the first time in a month to 9,801 tonnes – a near 3-year low when first reached in October.
 
Silver prices Friday touched a new 11-week low, just 20 cents above late-August’s 6-year low of $14.00 per ounce.

Gold Bullion Hits Near 6-Year Low on US-vs-Euro 'Divergence' as Precious Metals 'Near Capitulation'

November 13, 2015
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GOLD BULLION slipped to its lowest Dollar price in almost 6 years Thursday lunchtime in London, dropping with the Euro currency and other precious metals as Western stock markets fell hard.
 
Betting in the futures market put chances that the US Federal Reserve will next month raise its key lending rate from 0% at stronger than two-in-three.
 
Speaking ahead of a raft of other Federal Reserve policymakers, including chair Janet Yellen, “Prudence alone suggests [we should] normalize the policy rate in the US,” said St.Louis Fed president James Bullard – a noted ‘hawk’ due to join the voting panel in 2016 – in a speech this morning.
 
“The US economy is quite close to normal [with] unemployment of 5%…and inflation net of the 2014 oil price shock only slightly below the committee’s [2.0% per year] target.”
 
The Euro meantime touched fresh 7-month lows on the FX market after European Central Bank president Mario Draghi said external “risks” to economic recovery in the 340-million citizen single-currency zone are “clearly visible” – taken as a sign of fresh monetary stimulus to come at the ECB’s December meeting.
 
“Failing to deliver a pre-warned easing risks a surge in the Euro,” says ICBC Standard Bank FX strategist Steven Barrow, now forecasting that the ECB will cut deposit rates further below – and perhaps increase its QE bond-buying – at the same time as the US Federal Reserve finally raises Dollar rates from 0% after 7 years.
 
“To help push inflation back to the 2% target [by devaluing the Euro]…the ECB will get more bang for the buck by kicking off a divergence in policy with the Fed in December.”
 
Gold prices today hit $1074 per ounce in London’s wholesale bullion trade, $3 below July’s bottom and the lowest level in spot dealing since February 2010.
 
“It seems increasingly likely the Fed will start a slow rate hike cycle in December,” says a note from Dutch bank ABN Amro, “resulting in a stronger US Dollar versus the Euro, Yen and precious metals.”
 
Gold bullion priced in Euros also fell Thursday but less steeply, touching 5-week lows just above €1000 per ounce and still showing a 2.5% gain for 2015 to date.
 
Bullion priced in Dollars, in contrast, has lost 8.2% since the New Year.
 
Palladium also hit new 6-year lows, while platinum fell for the 11th session in a row to touch its lowest level since 2008 in wholesale trade.
 
“Capitulation may be close at hand,” says ICBC Standard Bank precious metals strategist Tom Kendall, “but it does not feel like we are there yet.”
 
Wholesale silver bullion bars spiked lower to a 3.5-month low of $14.21 per ounce, holding above August’s 6-year low of $14.00.
 
US Treasury bonds meantime ticked higher in price, pushing 10-year yields down from the week’s earlier 4-month highs above 2.36%.

Gold Demand Weak in London, Boosted in India, Dents World No.1 Jeweler's Profits in China

November 12, 2015
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GOLD DEMAND was again weak at the benchmark London pricing auction Wednesday, finding a clearing price at $1085.90 per ounce – the lowest LBMA Gold Price in more than 4 months – as equities and bond prices world-wide also held in a tight range.
 
“Global markets,” says a note from French investment and London bullion bank Societe Generale, “are giving a 70% chance of a US rate hike at the next Fed meeting.
 
“Gold has hence priced lower, sometimes harshly and sometimes gently, and it finally stopped short of the multi-decade support currently lying at $1080.”
Gold multi-decade support at $1080 according to SocGen chart
Meantime in India – today celebrating the peak gold-buying festival of Diwali – Q3 jewelry demand had already risen 5% year-on-year from July-to-October 2014 according to data compiled last month by specialist analysts Thomson Reuters GFMS – “the highest third quarter demand since 2008.”
 
Stronger retail investment demand in Q3 – also “attributed to the fall” in Indian gold prices to the lowest level since August 2011 – thus meant India “regained its top position as the largest overall consumer of gold” so far in 2015, beating China by 63 tonnes on GFMS’ data with 642 tonnes year-to-date.
 
China’s Chow Tai Fook – the world’s largest jewelry retailer – today issued a profits warning, with analysts at US investment bank Goldman Sachs blaming a likely rise in sales of simpler gold items, rather than gem-set pieces carrying higher gross margins.
 
Potentially weak Diwali gold demand in India, due to a poor harvest after weak monsoon rainfall, will be mitigated by government moves to boost small-bank lending, says the latest monthly India report from analysts Metals Focus – now data providers to the World Gold Council’s quarterly Gold Demand Trends report, due out for Q3 on Thursday.
 
“Steps taken by the government over the last 18 months should benefit rural India,” says Metals Focus, “as more people enter the formal banking system [thanks to] smaller bank licenses 
given to existing micro finance entities…mandated to allocate 75% of their credit to the priority sector.
 
“This in turn, should ultimately support rural gold demand” by providing loans when incomes fall.
 
Back in wholesale trade, “The gold price has proved resilient on the lows,” SocGen goes on, noting that “central-bank buying…is strong [and] the futures market has been cleaned out [and is now] much better balanced” after becoming heavily bullish late into the third quarter’s 10% rally.
 
But “ETFs are a concern,” SocGen adds, “off-loading systematically every day.”
 
The giant SPDR Gold Trust (NYSEArca:GLD) yesterday lost another 3 tonnes from the bullion needed to back its shares in issue as stockholders were net liquidators for the 8th day in succession.
 
Launched in 2004 with support from the World Gold Council, the GLD peaked by value in Q3 2011 at $77.5 billion.
 
It closed Tuesday worth less than $23.2bn, the lowest GLD valuation since January 2009.
 
Silver prices today re-visited Tuesday’s new 8-week low at $14.32 per ounce, extending the metal’s drop from late-October’s sudden 4-month high to 12.5%.

'Little Reason' to Buy Gold Before US Fed Rate Rise, Say Analysts, as ETF Discounts Widen

November 11, 2015
Latest News
PRICES to buy gold gave back a $5 pop for the second session running in London’s wholesale market Tuesday, trading back at $1089 per ounce as US stock markets opened lower after a noted Federal Reserve “dove” said he expects interest rates to be raised soon, if slowly.
 
Boston Fed president Eric Rosengren said late Monday he sees “real improvement” in the US economy, with last week’s Non-Farm Payrolls jobs data marking “very good news” to make a rate rise “possible” in December.
 
With US households cutting their debt since the financial crisis of 2007-2011, US corporations have doubled their debt instead according to a new report from investment bank Goldman Sachs, using “low interest rates to issue record levels of debt over the past few years to fund buybacks and M&A.”
 
Gold prices “still seem to be some ways away off from” fully discounting a December rate rise from the US Federal Reserve, says a note from US brokerage INTL FCStone, “suggesting more near-term paid ahead, at least until next month.”
 
“Yes, we are on the lows and looking pretty terrible, which is quite often the time to buy,” says David Govett at London brokers Marex Spectron.
 
But also pointing to the US Fed’s expected rate-hike in December, “There seems to be little reason to buy gold at the moment,” Govett says, adding that “Physical demand even at these levels is fairly muted and from an investment standpoint, who wants to buy a commodity that has performed fairly dismally all year?”
 
“Physical markets subdued,” agrees a brief note from Chinese-owned investment and bullion bank ICBC Standard Bank.
 
“Precious metal ETFs still in liquidation mode, many trading at a discount to NAV.”
 
The giant SPDR Gold Trust – the world’s largest exchange-trade trust fund by value at gold’s peak of late-summer 2011 – yesterday shrank to a new 7-year low by size, dropping another 3 tonnes from the bullion needed to back its shares (NYSEArca:GLD) as stockholders liquidated their positions.
 
Shrinking to 666 tonnes, the GLD’s backing has now fallen for 8 of the last 10 trading days, the worst run since November last year.
 
The giant iShares Silver Trust (NYSEArca:SLV) ended Monday with its 9,756 tonnes unchanged for almost a week, but the share price closed New York trade at a 1.4% discount to the net asset value of that bullion backing.
 
Shares in the closed-end Sprott Physical Gold trust fund (NYSEArca:PHYS) meantime widened to a 0.7% discount to NAV Tuesday morning, and have now traded at a premium to NAV only once since the start of March.
 
Between the trust’s launch in early 2010 and the gold-price crash of April 2013, a discount was only seen once according to data on Sprott’s site.

Gold Price Just 1% Above Half-Decade Low as US Fed Rate-Rise 'Makes Sense', China Demand 'Robust'

November 10, 2015
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GOLD PRICES dropped a $5 per ounce rally to $1095 in London trade Monday, retreating within 1.1% of late-July’s half-decade lows against the Dollar as Western stock markets fell to erase the gains made following Friday’s much stronger-than-expected US jobs data.
 
Major government bond prices also fell, pushing interest rates higher again, as New York’s major indexes dropped almost 1% at the opening to match losses in Eurozone equities.
 
Edging back to unchanged from last Friday’s 14-week closing low, gold priced in Dollars  is on track to drop for the third calendar year in succession, notes CNBC – something not seen since 1998.
 
Gold fell 5 years running to 1992. It rose 12 years straight from 2001 to 2012.
 
Gold price in US Dollars, end-year level
 
“Gold prices have been in a bear market since early 2013,” says the latest Metal Matters monthly analysis from bullion bank Scotia Mocatta, “when the Fed first started talking about the possibility of tapering quantitative easing.
 
“With the talk since QE ended being all about rate rises, we would have thought that the market has all but discounted a rate rise…the opposite of a ‘buy the rumour, sell the fact’ situation.”
 
After Friday’s jobs data put US unemployment at the lowest since investment bank Bear Stearns failed in spring 2008 at 5.0%, “I do think it makes sense to gradually remove the policy of accommodation that helped get the economy to where we are,” said San Fran Fed president John Williams – widely deemed a ‘neutral’ on the policy-making committee – in a speech Saturday.
 
But with the Federal Reserve’s inflation target at 2.0% per year, analysis by its own researchers currently puts the odds of consumer-price inflation averaging 2.5% or above over the next 12 months at zero, says a new data series and commentary from the St.Louis Fed.
 
“Although the macro environment is likely to remain unfavourable to bullion in the near term,” writes Japanese conglomerate Mitsubishi’s analyst Jonathan Butler in his new weekly update, “physical demand in China is robust, leading to some fundamental price support.”
 
Shanghai Gold Exchange volumes leapt Monday by more than 50% from last week’s average, reaching the highest level so far this month as prices dropped 1.5% against the Yuan.
 
Volatile price action in Comex gold derivatives then saw this morning’s LBMA Gold Price auction elicit the strongest opening-round demand in 2 weeks at a suggested price of $1092 per ounce, before finding a clearing price at $1095.60 per ounce.
 
The afternoon  auction, however, found only a quarter of that volume at a price just below $1090 – a level not seen since August until Friday’s strong US jobs report.
 
China added perhaps 14 tonnes of gold to its bullion reserves in October, reports Reuters, citing headline central-bank data.
 
Again twice the average monthly pace of 2009-2015 – when the People’s Bank reported unchanged holdings whilst apparently accumulating gold through other government agencies such as the State Administration of Foreign Exchange – that addition would have taken Beijing’s official holdings to 1,722 tonnes on Reuters’ maths, the fifth largest behind the US, Germany, Italy and France.
 
Meantime in India – historically the world’s heaviest gold consumer nation, now vying with China – the run up to today’s festival of Dhanteras “set a positive trend for gold jewellery purchasers for [this week’s] Diwali season,” the Business Standard quotes jewelry retailer director Rajiv Popley, reporting 15-20% sales growth.

US Jobs 'Kneejerk' Sinks Gold Bullion Near 6-Year Low, December US Fed 'Lift-Off' Now 75% Certain

November 7, 2015
Latest News
GOLD BULLION sank within $10 per ounce of a near 6-year low in London trade Friday, dropping 1.1% inside 2 minutes as October’s US jobs data showed the strongest rise in net hiring since May and the lowest unemployment rate since February 2008 at 5.0%.
 
The Euro hit new 7-month lows versus the Dollar at $1.073 and New York stock markets opened the day lower.
 
Betting on a December ‘lift off’ in US Fed interest rates from the last 7 years of 0% jumped from 1-in-2 to 3-in-4 according to futures market data.
 
Two-year US Treasury yields meantime jumped towards half-decade highs, offering new buyers 1.00% per annum, while 10-year yields rose to 2.33% – the highest level since gold set new 5.5-year lows at $1077 per ounce in late July.
 
Trading down as low as $1086 after the US non-farm payrolls report from the Bureau of Labor Statistics, bullion had earlier found very weak demand at this morning’s LBMA Gold Price auction in London at a price of $1108 per ounce.
 
Silver also fell on the payrolls report but held firmer than gold, also losing 2.1% top to bottom but holding at 1-month lows of $14.76 per ounce.
 
“As always,” says a note from David Govett at London commodity and bullion brokers Marex Spectron, “there is a big kneejerk reaction to these [US jobs] figures and close inspection of other factors such as average weekly earnings is warranted, as well as any revision to last month’s figure.”
 
September’s initial reading of 142,000 net jobs was today revised down to 137,000. But average weekly earnings for October showed a 0.4% month-on-month rise – twice the rate of pay gain forecast by economists.
 
This week’s earlier private-sector estimate of net non-farm hiring – based on “actual transactional payroll data” from the ADP Payrolls services provider – put October’s rise as the 3rd smallest in 20 months at just 182,000.
 
Friday’s BLS figure, in contrast, “is without question the sort of report that will continue to keep the [Fed] hike conversation for December alive and well,” reckons Canadian brokerage RBC’s chief US economist Tom Porcelli, quoted by Reuters.
 
“For even those folks that have been doubters about it, this has to pull them to the other side…A number like this is hard to shrug off.”
 
“Lift-off will soon be appropriate,” said Fed member Dennis Lockhart – a “moderate on the committee, described by some economists as dovish,” according to Bloomberg News – in a speech Thursday, “[but it] remains a close call.
 
“Revisions…of how quickly remaining output and inflation-target gaps might close could quite easily point to a longer period for a zero funds rate.” 
 
As for bullion, “Ongoing ETF outflows are also precluding higher prices,” says a note from German bank Commerzbank, while “speculative financial investors are also likely to continue withdrawing from gold [derivatives]…likewise bring[ing] pressure to bear on the price.”
 
Switching from a net bearish to strongly bullish position in Comex futures and options since late-July’s new 5.5-year lows in gold at $1077 per ounce, ‘managed money’ traders last week trimmed both their long and short betting.
 
Overall, however, they still held a net long position – of bullish minus bearish contracts – equal to 210% of the 2015 average to date.
 
Thursday saw the giant SPDR Gold Trust (NYSEArca:GLD) – the world’s largest exchange-traded trust product by value at gold’s 2011 peak – shrink for the 7th session in ten, needing 1.2% less bullion to back its shares as stockholders liquidated at the fastest pace since mid-July.
 
Shrinking within just 4 tonnes of early August’s fresh 8-year low at 667 tonnes, the GLD has now lost over 50% of its bullion since the end-2012 peak, and fallen 70% by value from gold’s price records of late-summer 2011.
 
“We seem to be caught in a relentless and severe bear market in most commodity complexes,” says the daily note from US brokers INTL FCStone, “and it is difficult to see what could conceivably break this psychology and persuade investors to give the asset class a more favorable second look.”
 
Broad commodity indices lost over 1% on Friday, as US crude oil dropped back through $45 per barrel, corn dropped 1% and copper prices fell to 6-week lows.

Gold Price 'At Risk' from Fed, Dollar & Jobs Data as India Seeks to Curb Demand, Trading Slumps, Mine Output Grows

November 6, 2015
Latest News
GOLD PRICES retreated to yesterday’s new 1-month lows in London trade Thursday, slipping near $1106 per ounce as US bond yields rose further following Federal Reserve chief Janet Yellen’s comment that a rate rise from 0% will be a “live possibility” at the central bank’s December meeting.
 
New York Fed president William Dudley said he “agreed” with Yellen’s view, while vice-chair Stanley Fischer said separately that on core inflation data, “We’re not that far from the 2% target” previously given as a reason for postponing a rate rise.
 
“Their comments will have an extra impact” on gold prices, reckons Dutch bank ABN Amro’s analyst Georgette Boele, “because the US Dollar is also directly affected.”
 
While ABN Amro expects the Fed to delay its first rate rise until 2016, “the risk for a hike this year has increased. In addition…a stronger [US jobs] report [due Friday] should send precious metal prices lower.”
 
Silver dipped to new 5-week lows beneath $15 per ounce Thursday as the US Dollar rose on the currency market, and 10-year Treasury yields edged up towards the highest levels since late July at 2.26% per year.
 
Demand and supply at the twice-daily LBMA Gold Price auction – the formally regulated benchmarking process which replaced the century-old “fixing” in March this year – balanced on very low volumes Thursday, barely equal to one-fifth of July to October’s average level.
 
New data from Japan’s Tocom derivatives exchange today showed gold trading volumes in October falling 36% from the same month last year.
 
The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust (NYSEArca:SLV), closed Wednesday with its quantity of bullion unchanged near 3-year lows beneath 9,757 tonnes – down 10% from early November 2014.
 
Gold’s largest ETF, the SPDR Gold Trust (NYSEArca:GLD), in contrast shed another 6 tonnes as stockholders liquidated shares, taking the total bullion needed to back the fund down to 680 tonnes – the smallest since late September, and less than 2% above August’s 8-year low.
 
Narendra Modi – prime minister of India, the world’s heaviest consumer market for gold – meantime launched 3 schemes Thursday aimed at distracting household savings from buying new physical metal in a bid to cut the country’s huge bullion imports, which rose 5% to 822 tonnes in 2014, with smuggling of perhaps a further 200 tonnes on top.
 
A lacklustre start to gold buying ahead of next week’s key Diwali festival could continue to disappoint Indian retailers, an article on Bloomberg View says, because poor rainfall likely means a poor harvest for the farming families who account for the bulk of the sub-continent’s jewelry demand.
 
Matching India with one-quarter of global end-use demand, China’s consumer gold demand has risen almost 8% so far this year from the same period a year ago, new data said Thursday from the state-mandated China Gold Association.
 
Long term, China’s appetite “could fall,” reports Reuters, citing analyst comments, “as the country moves to free the Yuan, enabling savers to gain direct access to foreign stocks or bonds.”
 
Mid-tier gold miner Randgold Resources (LSE: RRS) today joined world leaders Barrick and Newmont in reporting heavier output for Q3 as benchmark prices averaged 6% less than Q2 and 12% less than a year before.
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