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Gold Price Drops 'Clean Through Support' as Precious ETFs Shrink, US Jobs Hit Forecast

November 5, 2015
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GOLD PRICE losses of 2.4% for the week so far held firm in London trade Wednesday as global stock markets rose sharply and new US jobs data put net hiring in the world’s largest economy just ahead of analyst forecasts for October.
 
Latest US trade data were also better than expected, showing the smallest September gap between imports and exports since 2012 at -$40.8 billion. 
 
The Dollar jumped to new 3-month highs versus the Euro on the currency market.
 
Erasing the last of October’s 6.8% gain on Tuesday, the Dollar gold price today dipped further below $1115 per ounce – a new 5.5-year low when first seen in July.
 
“A move below $1155-1145 in gold,” said French investment and bullion bank Societe Generale in a technical analysis of chart patterns a week ago, “will confirm possibility of a deeper retracement initially towards $1133 and probably even towards $1120, the lower limit of the daily upward channel.”
 
“Major support now lies at $1118,” agreed a trading desk note from Swiss refining and finance group MKS yesterday, pointing to the “uptrend since July 20 collapse.”
 
Gold’s “recent descent is expected to end in the $1131-1122.50 region,” added Commerzbank’s Axel Rudolph in the German bank’s Weekly Technicals report Tuesday.
 
“We thought the 61.8% Fibo level at $1121 would offer support but the metal went clean through it,” says Canadian bullion bank and London market maker Scotia Mocatta’s daily technical analysis.
 
“Next support comes in at the October low of $1105 and September low of $1100. Sellers will be looking to fade any bounce to $1134.”
 
Silver meantime tracked the falling gold price Wednesday, setting fresh 4-week lows of its own beneath $15.20 per ounce.
 
Silver holdings needed to back the iShares Silver Trust (NYSEArca:SLV) shrank again Tuesday as shareholders liquidated stock, extending the 3-year low in global exchange-traded inventories.
 
Palladium prices had meantime rallied earlier today from new 6-week lows, hit Tuesday as ETF outflows also accelerated according to the specialist Platts news and data agency.
 
Platinum prices rallied from 4-week lows, but during October, says Japanese conglomerate Mitsubishi’s analyst Jonathan Butler, ETF trust funds holding the metal – primarily used in auto-catalysts for diesel engine vehicles – “saw the heaviest monthly liquidations of the year to date, primarily due to profit taking in the South African funds which reversed the recent net inflows to those products.”
 
Gold bullion holdings in the giant SPDR Gold Trust (NYSEArca:GLD) shrank another 3 tonnes yesterday, closing at the smallest level in 5 weeks at 686 tonnes – less than 3% above late-July’s new 8-year lows.

'Buy Stocks, Ditch Gold' Advise Fund Managers as Nasdaq Hits Tech Bubble Peaks, Bullion Hits New 1-Month Low

November 4, 2015
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GOLD BULLION retreated to new 1-month lows beneath $1130 per ounce Tuesday in London, dropping some 5.6% from mid-October’s peak as world stock markets edged back from new 2.5-month highs.
 
Silver bullion held just above Monday’s new 1-month low at $15.30 per ounce – more than a Dollar below last week’s spike to 4-month highs.
 
New York’s Nasdaq index – which rose 95% in the six months ending with the peak of the “Tech Stock Bubble” in March 2000 – closed Monday at fresh 15-year highs.
 
“The [stock] market’s fear of crashing has left it thrashing around looking for the merest hint of danger,” says UK hedge-fund manager Hugh Hendry of Eclectica Asset Management, famous for recommending that investors “do panic” during the first Eurozone banking crisis and currently showing an 18% annual return to clients of his £30 million Absolute Macro fund ($46m).
 
“And yet nada…The weeping prophets have failed to force a crisis after one hell of a go.”
 
“As a US investor, I don’t really see either of [Dollar weakness or inflation] problems occurring right now,” CNBC quotes Andrew Burkly, head of portfolio strategy at $282 billion Oppenheimer asset management.
 
“I’m still pretty bullish on equities until the year end, so I would recommend not having a gold position here.”
 
“The worst is over price-wise,” says bullion broker Marex Spectron’s David Govett in a note today, “but it is not time to once again invest.
 
“Time and time again people seem to be drawn into gold and silver,” Govett adds of the August to October rally, “[but] in traditional bullion fashion the markets have given up the majority of their gains and we find ourselves back in the doldrums.”
 
Short term, “Expect the usual jumpy moves” he advises ahead of Wednesday’s ADP report on US jobs hiring in October, and then “most importantly [official government estimates of] Non-Farm Payrolls on Friday.”
 
“Gold’s sensitivity to the unemployment report remains high,” agrees a bullion-market note from analysts at Asia-focused UK bank Standard Chartered – now cutting 1 job in 6 worldwide and seeking to raise new capital from  the stockmarket – “and an increase [in US hiring] is likely to pressure [gold] prices even lower.
 
“Our economists expect the Fed to hike in December.”
 
But while “there will be some form of impact,” reckons Sandeep Biswas, CEO of Newcrest Mining – the world’s 6th largest gold miner by output in 2014 – “I think the market has already factored a lot of that already in the price.”
 
As a group with Newcrest’s peers, Australian gold mining stocks rose 85% on the ASX over the 12 months to mid-October notes the Sydney Morning Herald.
 
Gold bullion priced in Australian Dollar rose 22% over that period.

Bullion Prices 'Set to Drop Markedly' as Silver ETF Shrinks Near 3-Year Low, London Gold Demand Sinks

November 3, 2015
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BULLION PRICES fell to new 4-week lows in London on Monday, with gold edging $5 per ounce lower to touch $1136 in quiet trade – and silver sliding 6% from last week’s spike – as European stock markets shrugged off weak manufacturing data which earlier saw Asian shares drop almost 2% for the day.
 
Strong UK manufacturing data bucked the trend ahead of this week’s interest-rate decision from the Bank of England, with the British Pound jumped near its strongest levels since mid-September.
 
That squashed gold bullion prices for UK investors to £734 per ounce, down over 5% from last week’s 4-month highs to the lowest level since start-October.
 
“We believe that price expectations for gold and silver are too bullish,” says Robin Bhar at French investment and bullion bank Societe Generale, writing about the recent London Bullion Market Association’s precious metals conference in Vienna, and the LBMA attendees’ average price forecasts of $1159 and $18 per ounce for gold and silver one year from now.
 
“The reality of tightening US monetary policy is still, in our view, set to strengthen the US Dollar and see Treasury yields rise,” Bhar explains, leading “both gold and silver to drop markedly.”
 
SocGen’s poor outlook for silver “[is] compounded by the unresponsive of mine supply and the fact that industrial demand will barely benefit from the much lower prices.”
 
Silver’s largest investment trust – the iShares Silver ETF (NYSEArca:SLV) – last week shrank to its smallest size since the turn of 2013 as stockholders liquidated shares and the amount of metal needed to back the trust’s value fell.
 
Ending Friday below 9,761 tonnes – and with only 17% of its stock held by “institutional shareholders” according to data from Nasdaq.com – the SLV has now shrunk 10% by weight from the 3-year peaks hit this time in 2014, and dropped over 71% by value from the records of spring 2011 to stand at $4.9 billion.
 
Gold’s 33% institutionally-owned SPDR Trust (NYSEArca:GLD) meantime shrank 0.5% last week to reach its smallest size since mid-October.
 
Worth some $25.4bn – down 67% from its August 2011 peak value – the GLD has shrunk 49% by weight since its peak holdings by weight at the start of 2013.
 
Monday’s demand for bullion at the LBMA Gold Price benchmarking auction this morning started at just 0.3 tonnes – less than 6% of the third quarter’s daily clearing average – at the opening suggestion of $1137.20 per ounce.
 
Demand then rose 10-fold as a lower clearing price was found to match supply at $1135.80 – some 1.1% below Friday morning, at the lowest London benchmark since 5 October.
 
Shanghai gold prices had earlier closed near flat for the day, despite a retreat in the Yuan from last week’s sharp jump on the FX market.
 
With Dollar bullion prices falling in London, that extended the premium for metal delievered in China, over and above global benchmarks, to $6 per ounce – well over twice the average incentive offered to importers during the last 12 months.

Gold Falls 3rd Day, Bullion Offers 'Cheap Insurance' as S&P Jumps 9% for Oct. Despite Profit Warnings

October 31, 2015
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GOLD BULLION fell for a third day running in London trade Friday, sliding to dip below $1140 per ounce for the first time in 3 weeks as the Dollar fell after weak US income, spending and inflation data.
 
Silver also slipped again, dropping 5% from Wednesday’s sudden 4-month highs to trade at $15.51 per ounce of wholesale bullion.
 
The Chinese Yuan had earlier made its sharpest 1-day rise versus the Dollar since onshore trading began in 2005, with the Financial Times pointing to expectations it will be approved for the IMF’s basket of reserve currencies in November.
 
Shanghai gold prices held firm, however, with premiums above benchmark London quotes ending the week at $1.50 per ounce.
 
US Treasury bond prices meantime recovered the week’s earlier loss, and New York’s S&P500 index of US equities held on track to end October 9% higher, its best monthly gain in four years according to MarketWatch.
 
October however brought profits warnings across US industry, including from publishing-software business Adobe (Nasdaq:ADBE), retail giant Wal-Mart (NYSE:WMT), and heavy construction-equipment manufacturer Caterpillar Inc.(NYSE:CAT).
 
“Buying in most of the [Asian] region is picking up,” a gold dealer in Singapore told Reuters earlier. “Not a lot, but we are seeing small quantities moving.”
 
For traders and investors, “The short-term outlook for gold is somewhat negative,” reckons a note from US brokerage INTL FCStone, “as the [precious metals] complex faces headwinds of a rising Dollar, a more ‘antagonistic’ Fed, a surging US equity complex, and deteriorating chart patterns.”
 
Having broken above its 2015 downtrend in October, gold prices turned south on Wednesday from just above $1180 per ounce – the previous “crash” low from 2013, when gold sank 25% inside 3 months.
 
Gold price in US Dollars per ounce, 2015 downtrend and 2013 crash low
“Negative sentiment has been building since Wednesday’s FOMC meeting,” agrees Swiss refinig and finance group MKS’s Asian trading desk, “with participants increasing their expectations for a December rate hike.”
 
But looking at the broader financial outlook, “We have been keen observers of the growing market distortions created by global monetary policy,” says Gareth Lewis, chief investment officer at £1 billion manager TilneyBestinvest ($1.5bn), telling What Investment why he’s added gold to the group’s multi-asset funds.
 
“Gold has a low correlation with other risk assets and serves as a form of insurance. With low and even negative real interest rates, the opportunity cost of us providing this protection is low.”
 
Friday’s 3pm benchmark gold price auction in London attracted the strongest demand for any afternoon session this week at an opening quote of $1140.60, before finding a clearing price at $1142.35 per ounce – some 2.5% above September’s last gold bullion benchmarking.
 
Meantime in India – the world’s largest gold consumer nation again in Q3 by overtaking China, according to specialist analysts GFMS – the government today announced a 2.75% interest rate on its forthcoming ‘gold bond’ promotion to investors, aimed at reducing the country’s heavy imports bill by directing bullion demand into banking products instead.
 
Any gains paid to reflect a rise in gold prices, however, will be subject to capital-gains tax, potentially denting uptake of the new products, says The Financial Express.
 
Mid-way through the current tax year, the government has already used 68% of its planned deficit between receipts and expenses, the Economic Times reports.

Gold Price Extends Post-Fed Plunge from 'Unfathomable' Spike, 'Good Buying Opportunity' on Weak US GDP Data

October 30, 2015
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GOLD PRICES fell further on Thursday in London, dipping below $1150 per ounce for the first time in 3 weeks to trade 2.7% below yesterday’s 2-week high – hit just before the US Federal Reserve announced no change to its zero interest rate policy, now in place since December 2008.
 
Only 1 member of the 10-person FOMC voted to raise in October 2015 (again Jeffrey Lacker of the Richmond Fed), and the central bank’s policy statement repeated that a future rate hike remains dependent on incoming data.
 
New GDP figures today showed that, had the Fed’s preferred PCE measure of inflation held at Q2 levels in the third quarter of 2015, real economic growth in the US would have sunk to just 0.3% annualized.
 
This drop in gold prices “could present a good buying opportunity for physical buyers in China,” says a note from Swiss investment and bullion bank UBS, “who need to stock up for the Lunar New Year festivities.
 
“We believe opportunistic investors who remain sceptical about the global macro environment should also view any weakness ahead as a chance to re-establish positions [in gold] at better levels.”
 
At July’s new 5.5-year lows in the gold price of $1075, speculative traders in US futures and options cut their “net long” position (of bullish minus bearish bets) to the lowest level since 2003.
 
With gold then peaking $100 higher ahead of this week’s Fed decision, latest data from US regulator the CFTC showed the “net spec long” jumping to the largest level since February – twice the last 20 years’ average, and swollen by 350% from a month before for the fastest 5-week growth in 13 years.
 
“[The] high net long positions held by speculative financial investors,” says a note from commodity analysts at German bank Commerzbank, “[meant] the prices of gold and silver would likely come under pressure if the Fed were to signal an imminent rate hike.
 
“Some of these net long positions are now likely to have been covered,” Commerzbank believes, with gold prices swiftly falling from above $1180 after media reports said Wednesday’s Fed statement put a December rate-hike “firmly on the agenda”.
 
Calling yesterday’s earlier rally “unfathomable”, ICBC Standard Bank strategist Tom Kendall today says that “Technically the daily chart still looks okay, just.”
 
But with heavy trading in put options,however – giving the owner the right to sell at higher prices if gold falls – “I would rather be in the buyer’s shoes than the seller’s,” Kendall adds, expecting further drops ahead.
 
Silver meantime caught up with the drop in gold prices Thursday, losing its earlier hold on last week’s closing level to trade at a 3-week low of $15.57 per ounce – more than 4% below Wednesday’s sudden spike to 4-month highs.
 
European stock markets closed the day lower as the single Euro currency recovered half-a-cent of Wednesday night’s 2-cent plunge to 3-month lows at $1.09 on the FX market.
 
US Treasury bond yields extended their rise, with the interest rate on 10-year debt reaching the highest level in a month above 2.15% per annum.

Bullion Prices Jump, Silver Hits 4-Month High Ahead of US Fed Rates Decision

October 29, 2015
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SILVER BULLION jumped to new 4-month highs Wednesday in London, outpacing 2-week highs in gold as Western stock markets also gained ahead of the US Federal Reserve’s latest policy announcement – widely expected to leave its key interest rate below 0.25% for the 84th month running.
 
Crude oil rebounded over 3% after new data showed US energy stockpiles growing less quickly than forecast last week.
 
With the US Dollar edging lower on the currency market before the central bank decision, wholesale gold bullion prices touched $1182 per ounce – 1.5% above last week’s finish – going into the afternoon’s benchmark LBMA price auction.
 
Silver meantime shot to $16.30 per ounce – some 3% higher from last week – to trade at the highest Dollar price since mid-June.
 
Silver hits 4-month high at $16.31 per ounce
 
“We reiterate our longer-term bearish view,” said a note earlier from Swiss private bank and asset manager Julius Baer, calling current price levels “another selling opportunity.
 
“Renewed US Dollar weakness is one of the key upside risks,” Baer’s analysts went on. “[But] medium to longer-term support should only materialise if the United States showed continued weakness that would prompt the Federal Reserve to loosen rather than tighten monetary policy.”
 
Despite “strengthening economic activity…and inflation showing a clear upward trend,” the Riksbank in Sweden today held its key lending rate at minus 0.35% and added another 65 billion Krona to its QE bond-buying program – now set to total SEK200bn ($23bn) by June next year.
 
The Krona however rose on the currency market Wednesday against both the Dollar and the Euro.
 
Looking at the 19-nation Eurozone, “If we see a risk that inflation would go back to 2%…in a much more sluggish way than previously expected,” said European Central Bank board member Benoit Coeure last night, “that may also mean an adjustment of the deposit facility rate.”
 
“The credibility of the policy,” agreed ECB chief economist Peter Praet separately, “you cannot take it lightly.
 
“[We] have a duty to use the instruments” available, such as negative rates and QE, he said.
 
But “I don’t see any convincing reason to consider further policy action in December,” countered ECB governing council member – and chief of Estonia’s central bank – Ardo Hansson today.
 
“If something very fundamental changes, we could perhaps re-evaluate, but now I don’t see any need to take such a step.” 
 
Back in precious metals, “[Gold] looks like it is stalling but may not be ready yet to weaken,” said a note from global bank and bullion market maker HSBC this morning, noting five consecutive weeks of growing bullishness amongst speculators trading Comex derivatives. 
 
“If gold cannot push convincingly higher soon, recent longs may become disenchanted and liquidate…[and] could knock gold back below $1150 quite rapidly.”
 
Also calling $1150 a key level, gold prices are “consolidating at the 50% retracement of the move seen [so far] in 2015 at $1192,” says a technical analysis from Germany’s Commerzbank.
 
“Dips lower [are] viewed as corrective only…indicated to hold circa $1150/35 for another leg higher to then take hold.”

'No Action' in Gold Price Ahead of US Fed Rate Decision, Crude Oil Sinks on 'Glutted' Strategic Reserves

October 28, 2015
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GOLD PRICES held in a tight 0.5% range for the second day running in London on Tuesday, trading again around last week’s finish at $1165 per ounce as crude oil fell but US stock markets also held flat ahead of tomorrow’s October interest-rate decision from the US Federal Reserve.
 
European equities fell, dropping 0.9% as the single currency drifted against the Dollar, while Eurozone bond prices rose, pushing yields down.
 
Crude oil prices meantime sank to new 2-month lows after Bloomberg noted a plan – part of Monday night’s US budget deal in Washington – to sell 8% of the United States’ strategic reserves over 5 years starting 2018.
 
“The proceeds will be deposited into the general fund of the Treasury,” according to the proposed bill drafted to avert another ‘debt ceiling’ government shutdown.
 
“In 1999,” notes Bloomberg writer Javier Blas on Twitter, “the UK sold [half] its gold reserves, marking the bottom. Will the US plan to sell oil from SPR [mark] the bottom too?”
 
Oil facilities to hold China’s strategic reserves are “full” says a Reuters report, with 4 million barrels of crude “stranded in two tankers off an eastern port for nearly two months due to a lack of storage” according to two trade sources.
 
“We don’t expect to see much action in gold prices,” says US broker INTL FCStone, “until after the Fed meeting and the third quarter GDP report are out of the way.
 
“Both these variables will likely clarify the Fed’s intentions…to raise rates, which in turn should impact gold’s short-term direction.”
 
“Many market participants [have] stayed on the sidelines ahead of the 2-day FOMC meeting,” agrees German bank Commerzbank’s commodity analysts, but latest data from US regulators do show speculators “increasing their exposure to gold over the past 5 weeks,” they add.
 
“Any hawkish comment from the Fed may put those longs under pressure.”
 
The European Central Bank is meantime likely to cut Eurozone interest rates at its next meeting, according to a Reuters poll of economists, with consensus now seeing an 80% chance of the ECB’s key rate falling from the current 0.05% per year.
 
Euro gold prices today recovered a €5 drop to trade back at last week’s closing level of €1055 per ounce – the highest Friday finish since the first week of July, and some 8.5% above mid-September’s new 2015 lows.
 
“On a short-term view,” says a technical analysis from bullion bank Scotia Mocatta’s New York team, “the metal still appears to be testing correction levels [in Dollar terms], with our key pivot seen at $1156.
 
“While that level holds we expect the bull trend to renew to the topside with $1192 and $1209 key target levels,” Scotia goes on, pointing to the 50% and 61.8% Fibonacci retracement levels of this year’s trading range to date.

China Rate Cut 'Lights Fire' Under Global Stocks, Gold Jumps Most vs Euro

October 23, 2015
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GOLD PRICES jumped Friday lunchtime in London, rising 0.7% in 15 minutes after the People’s Bank of China cut its key interest rate for the 5th time in a year.
 
With 1-year deposits now set to pay just 1.5% from tomorrow – below September’s official pace of inflation – Beijing also cut the reserve requirements for commercial banks, enabling them to lend out more of the money they take in from savers.
 
New data earlier showed China’s average home price rising for a fifth month running in September, led by the big Tier 1 cities.
 
Asian stock markets had already followed the US sharply higher, adding almost 2% after Thursday’s strong hint from European Central Bank chief Draghi that more Eurozone monetary stimulus – whether through additional QE or lower rates – will arrive in December.
 
The Paris and Frankfurt stockmarkets led a further charge higher in Euro equities after Friday’s PBoC rate cut, heading for 4.8% and 6.9% week-on-week gains respectively.
 
Flash estimates today showed Eurozone business activity rising sharply in October, with manufacturing growth firm on Markit’s PMI survey, and the 19-nation currency union’s services sector expanding near this summer’s 4-year record.
 
“The Euro [currency] plunged on this [ECB] news against the US Dollar,” notes German bank Commerzbank, “but surprisingly gold has held the current lows [and] support at $1165-1167 very well throughout.
 
Speaking to Bloomberg News, “Gold in Euro terms is looking very interesting,” adds Commerzbank analyst Eugen Weinberg in Frankfurt.
 
Gold price in Euros per ounce, week-ending Friday 23 October 2015
 
Euro gold prices leapt Friday above €1066 per ounce, some 2.7% up for the week at fresh 3.5-month highs.
 
Sterling gold prices also rose sharply, breaking above £765 for the first time since June. But priced in the Dollar, gold only recovered the week’s earlier 1.2% drop to trade back at last Friday’s close near $1177.
 
Silver also rose with gold prices, but again only to match last Friday’s 4-month closing high above $16 per ounce.
 
“Gold found interest in China overnight,” says Swiss refining and finance group MKS’s trading desk, but “the key for the yellow metal will be a break of the 200-day moving average that will open up the recent high at $1192.
 
“Weighing upon a move higher is next week’s large [bearish options contracts] strikes sitting at $1150.”
 
Next week also brings the October interest-rates decision from the US Federal Reserve – expected to leave the cost of borrowing unchanged below 0.25% for the 83rd month running.
 
New data yesterday said US home prices rose 0.3% in August, with sales of existing properties last month jumping at the 5th fastest annualized pace since Fed interest rates hit zero in the depths of the 2008 post-Lehman Brothers’ crisis.
 
“Coming on the heels of a dovish Draghi yesterday,” says ICBC Standard Bank precious metals strategist Tom Kendall, “[the PBoC move] has lit a small fire under risk assets. 
 
“But note that the last four PBoC interest rate cuts have been followed by significant corrections in the gold price.
 
“The anti-consensus trade here,” Kendall goes on, “would be to sell this rally in gold. [Because] there is no clear link between demand for gold in China and Chinese real interest rates.”
 
Ahead of the PBoC rate cut news, Shanghai gold prices ended Friday higher, regaining a solid premium to the global benchmark of London bullion quotes of more than $2 per ounce.

 

Gold Bullion Rallies vs Euro as ECB Holds Rates & QE, Some LBMA Delegates 'Cautiously Bullish'

October 22, 2015
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GOLD BULLION held steady in most major currencies Thursday in London, but crept higher to recover half of yesterday’s 1.1% drop against the Euro as the European Central Bank kept its interest rates and QE policy unchanged.
 
Refinancing rates stay at 0.05%, with deposit accounts at the ECB continuing to cost commercial banks choosing to use it 0.20% per year.
 
Euro stock markets stayed flat and Eurozone government bond prices slipped on the news, while the gold price in Euros edged up to €1031 per ounce – a 15-month high when first recovered in January.
 
Dollar gold bullion prices meantime held at $1167 per ounce, some $100 above end-July’s new 5.5-year lows.
 
“The possibility of a three-digit gold price was talked about more openly,” says a note from Swiss bank and bullion market-maker UBS reviewing this week’s London Bullion Market Association conference in Vienna.
 
But “there were also more people…starting to warm up to gold,” it adds, citing “disappointment with the Fed’s decision to keep rates on hold in September [plus a surprise] that the possibility of Fed easing and negative interest rates has become part of the conversation.”
 
Now “cautiously optimistic,” bullion bank HSBC’s analyst James Steel said at the LBMA conference that he now sees gold ending 2015 at $1205, with a rise across 2016 to $1255.
 
“Over the medium term,” agrees a trading-desk note Thursday from Swiss refining and finance group MKS, “we expect to see gold once again push towards $1200.
 
“[But] worth noting are the [US futures contracts] option expiries next Tuesday, with a good amount of open interest around $1150 potentially keeping gold prices under pressure.”
 
Technically, “The recent strong performance is now overshadowed by the proximity of the Weekly Cloud base at $1202,” says a note from Japanese conglomerate Mitsui’s precious metals team, applying Ichimoku analysis.
 
Wednesday’s 4th gold drop in 5 days “sees current price in a wave 4 correction of the up-move that started in September at $1100,” says Canadian bullion bank Scotia Mocatta in an Elliott Wave analysis.
 
“Critical pivot lies at $1156 – the top of wave 1. For the sequence to be correct wave 4 cannot breach the top of wave 1. We expect a wave 5 leg higher to $1221.”
 
Sales from Polyus Gold – the largest miner in world #3 producer nation, Russia – fell 2% in July-to-September from the third quarter of last year, as lower prices outweighed volume growth.
 
Going into the key festival season in India – the world’s #1 consumer until overtaken by China in 2013 – investment demand has been “badly affected” by gold’s multi-year falls, one retailer today tells Reuters, adding that footfall to her chain’s showrooms has fallen from the same period in 2014.
 
Now the #1 importer, said MKS-Pamp’s Dubai chief Frederic Panizzutti at the LBMA conference this week, China is “absorbing gold [which] will not leave for the foreseable future.
 
“Over the medium to long term,” he added in an interview, “it is providing the market with a very solid base for a long-term bull trend.”

Gold Prices Drop 1% as London Market Returns from 'Keep Calm' LBMA Conference

October 22, 2015
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GOLD PRICES fell to 1-week lows in London trade Wednesday afternoon as Western stock markets cut earlier gains and crude oil tumbled following news of a dramatic build in US energy stockpiles.
 
Total US crude oil stocks grew by more than 8 million barrels last week, the Energy Information Agency said, the fastest accumulation since April as imports and gasoline production grew.
 
After holding firm near last week’s closing level of $1177 per ounce, gold prices dropped 1.1% and crude oil fell more than 2%.
 
Traders returning from the London Bullion Market Association’s annual conference in Vienna – which raised “existential questions” for the industry as one speaker put it – had earlier found only soft interest at gold’s morning benchmarking auction, with demand and supply clearing in the key afternoon session at $1167.10 per ounce.
 
That was the lowest LBMA Gold Price since Tuesday last week.
 
“The current gold price,” says one bullion bank delegate reviewing the conference, “underlines the struggle of the industry to decide which way to go.”
 
Gold’s 13-week rally “appears to be positioning related,” adds derivatives strategist Maneesh S.Deshpande at investment bank and bullion market-maker Barclays, pointing to short-covering by bearish traders while new bullish betting in the futures and options market “does not appear to be extreme.”
 
While Barclays had “expect[ed] the current rally to continue…however, we believe the upside to be limited,” Deshpande goes on, “as the fundamentals are still soft for gold…with central bank buying remaining steady and gold production forecast at multi-year highs.”
 
Russia added another 34 tonnes of gold to its 1,300 central-bank reserves last month – the sixth largest national hoard – but European central bankers speaking at the LBMA conference in Vienna showed more appetite for lending out their existing holdings than expanding them.
 
Borrowing and selling by gold-mining companies wanting to “hedge” their production against further price falls remains muted, the conference also learnt, with short-term options derivatives a preferred, but small strategy at present.
 
“Those people who believed that [the recent rally] was the start of a bull market,” adds another LBMA conference attendee, David Govett of brokers Marex Spectron, “may be disappointed.
 
“I personally believe it is the beginning of nothing and that the market will drift lower over the coming weeks.”
 
Also reviewing the conference however, “Vienna was well attended,” says ICBC Standard Bank strategist Tom Kendall, “and the atmosphere was more ‘keep calm and carry on’ than ‘band plays on as ship goes down’.”
 
Even so, “Attendees did not miss much action while away from their desks.”
 
Gold bullion needed to back shares in the US-listed SPDR Gold Trust ETF (NYSEArca:GLD) briefly peeped above 700 tonnes for the first time since July on Friday, recovering half of Monday’s 7-tonne outflows in yesterday’s trade.
 
Today’s turnover on the Shanghai Gold Exchange – the only legal route for bullion into China, the world #1 consumer market – again held firm Wednesday, but prices stayed flat to lower against quotes in London after world gold prices last week touched near-4 month highs.
 
Silver also fell in London  with gold prices, extending its drop from last Friday’s 18-week closing high at $16.05 to 2.2% so far.
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