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Gold Off 2-Week Low as Dollar Slips After Weak Manufacturing PMI, Silver ETF 'Steadier'

October 2, 2015

GOLD BULLION rallied 0.7% from new 2-week lows in London trade Thursday as the Dollar dropped following the weakest data on US manufacturing activity since 2013.

New York stock markets also slipped after the Institute for Supply Management said its manufacturing PMI index fell last month from 51.1 to 50.2 – only just showing expansion.

Financial data providers Markit also said their survey of manufacturing purchasing managers held near 2013 lows.

Gold recovered to $1118 per ounce as the US Dollar fell on the FX market.

Silver bullion rose faster, adding 1.4% from its own new 2-week lows at $14.49 per ounce.

“US manufacturing growth is essentially flat,” says a metals market note from US brokerage INTL FCStone, “especially if automobile production is taken out of the mix.

“Nevertheless, the general consensus is that the Federal Reserve is still going to raise rates sometime this year.”

Ten-year US Treasury yields fell as bond prices rose after the manufacturing PMIs Thursday, hitting fresh 5-week lows of 2.03%.

But interest rate betting in the futures market still put the odds of a Fed rate hike in October around 1-in-10, with odds nearer 2-in-5 for ‘lift off’ at the December meeting.

Thursday’s earlier “weakness” in the gold price,” says German bank Commerzbank, “also dragged the prices of silver, platinum and palladium down with it, though their losses have been limited thanks to the firm base metal prices.”

“Lower lows and lower highs make for a short-term bearish trend,” said bullion bank Scotia Mocatta’s daily chart analysis Wednesday night.

Should this trend contine, “[it] will run into technical support at $1100 from September 11th. Moving average resistance now comes in near $1130.”

Despite yesterday’s drop in gold prices, however, the giant SPDR Gold Trust (NYSEArca:SLV) yesterday needed a further 3 tonnes of bullion to back its shares in issue, taking the total to a 10-week high after growing in size for 4 days in a row last week – a run not seen since September 2012.

Totalling 687 tonnes, however, the GLD’s holdings have nearly halved from their peak of three years ago.

The giant iShares Silver Trust (NYSEArca:SLV) has meantime added 10 tonnes from last week’s new 4-month low of 9,898 tonnes, but the number of shares outstanding – and so the quantity of bullion held to back them – remains almost 10% beneath 2014’s highs.

“Total silver ETF holdings [unlike gold] have remained relatively stable since 2013,” says a note from precious metals analysts Thomson Reuters GFMS, in part because those trust funds tend to appeal to private “retail” investors.

Gold ETFs, in contrast – and appeal more to “managed money” investors – “have been on a declining trend since the beginning of the year,” GFMS adds, with total holdings across the space “down 4% intra-year…recording a 9% decline year-on-year” despite the upturn seen since the US Fed’s surprise ‘no change’ announcement mid-September.

Gold Price Falls as US Jobs Market Grows, China Adds 16 Tonnes of 'Volatile, Non-Yielding' Bullion

September 30, 2015

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GOLD BULLION prices fell to 2-week lows in London trade Wednesday after new US data showed jobs hiring stronger than analysts forecast.

Dropping to $1119 per ounce – a level identified by several bullion analysts as today’s ‘moving average’ of the last 2 months’ prices – gold bullion fell as the US Dollar gained on the FX market.

Payrolls service provider ADP said US companies added a net 200,000 jobs this month, lagging the pace of last September but beating analysts’ average forecast by 2.5%.

The US government’s non-farm payrolls estimate for September is due out Friday.

The People’s Bank of China meantime said it grew national gold reserves by 1.0% in August, taking the total above 1,693 tonnes.

Buying 16 tonnes in August, the PBoC grew its reserves at twice the average monthly pace of accumulation between 2009 and 2015.

But the State Administration of Foreign Exchange also said today in a semi-annual report that Beijing’s bullion holdings are now large, and expose it to what SAFE sees as gold’s price volatility, small market size, heavy storage costs, poor liquidity, and zero interest payments.

“Not exactly an advert for gold,” writes strategist Tom Kendall at the Chinese-owned ICBC Standard Bank in London, “and not really supportive of the gold-bug conspiracy theorists who suggest China’s official holdings are much higher than the PBoC reports.”

Shares in giant mining and commodities trading group Glencore (LON:GLEN) meantime rallied for a second day, recouping most of Monday’s shock 29% plunge.

Bloomberg reports rumors that, in its bid to cut the group’s $30 billion of debt, Glencore is now looking to finance future gold and silver output from its South American operations in so-called “streaming” deals.

“Analysts say Chinese companies would be most interested in the Swiss trader’s copper mines,” the newswire adds.

But overall, “The current turmoil in commodities is clearly weighing on gold,” adds another bullion bank’s sales desk, “especially as physical demand (India, China, Middle East) is absent and inflation remains lackluster.”

Trading on the Shanghai Gold Exchange fell sharply today ahead of the week-long National Day holidays starting Thursday.

For US Dollar price, “Dips should find initial support circa the 55-day moving average at $1119,” says a technical analysis from Germany’s Commerzbank, “ahead of the 2-month uptrend [now] at $1101.69.”

With official US non-farm payrolls data due Friday, “I suspect we will stay range bound until then,” the Wall Street Journal quotes David Govett, head of precious at brokers Marex Spectron in London.

Gold Rallies from 1-Week Low But 'Fails to Benefit' from Stock Market Volatility, Prices Weak in India & China

September 30, 2015

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GOLD PRICES recovered from a near 1-week low beneath $1125 per ounce in London on Tuesday, trading 0.6% higher against a rising Dollar following better-than-expected US consumer confidence data.

Priced in the Euro, gold rallied 1.0% from its first drop below €1000 in 8 sessions.

Inflation in Germany turned negative this month for the first time since January, a flash estimate said Tuesday, with consumer prices dropping 0.2% from a year ago.

European stock markets ended the day slightly lower after Asian shares sank, but New York equities rose meantime with Treasury bonds, pushing the 10-year US yield down to new September lows at 2.08%.

The central bank in India – the world’s No.2 gold buying nation – today cut its key interest for the 4th time this year following a new record-low in official inflation data.

“It seems clear,” says one bullion bank’s analyst in a note, “that capital seeking a refuge from emerging markets volatility, credit market stresses, and base metal weakness is going into Treasuries and Bunds, rather than gold.”

Looking at Asian gold prices, “the Indian market is at a notable discount to world prices,” adds James Steel at London bullion market maker and clearing bank HSBC, “indicating little import demand despite the proximity of the gold buying season” which culminates with Diwali, falling this year in early November.

“This may be because of stellar imports in August. Nonetheless, reduced demand from a major buyer may limit gold’s upside.”

Stock markets in China – the world’s heaviest miner, importer and private consumer of gold – ended Tuesday almost 3% lower. Bullion prices on the Shangai Gold Exchange, which will also close for a week from tomorrow night for the National Day celebrations, meantime fell to a premium of just 40 cents per ounce above London quotes, cutting the incentive for new imports.

Gold prices are “hardly benefitting from the rout we saw in the US stock market,” adds US brokerage INTL FCStone, but “we think gold will likely take somewhat of an inverse cue from the US equity markets…especially if the selloff in global equity markets continues.”

“Without question,” says Philipp Vorndran, capital market strategist at €20 billion asset manager Flossbach Von Storch, “first-class equities are indispensable for generating wealth in a low interest rate environment. However, the perception that the financial system has become safer is naïve.

“[Monetary policy] is an enormous experiment with an uncertain outcome. If it fails, people’s confidence in the paper money system will disappear. Gold should therefore be an integral part of any broadly diversified portfolio.”

But “the benign inflation outlook and the view ahead for US interest rates are not very supportive of gold’s value,” counters Andy Seaman, partner and CIO at London’s $1.6 billion Stratton Street Capital – also speaking to CityWire – “and even with the volatility seen in the Chinese stock markets, gold has found it difficult to maintain support.”

Bullion Erases Sept' Gain as Base Metal Miners Crash, 'Strong Signals' of Lehmans-Style Financial Crisis

September 29, 2015

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BULLION prices fell sharply in London trade Monday, cutting 1.4% off gold and 3.8% off silver as Western stock markets dropped and base metals sank with crude oil prices.

Dropping to $1130 and $14.54 per ounce respectively as the Dollar edged higher on the FX market, gold and silver bullion both erased last week’s late gains, retreating to their levels from the start of this month.

Platinum fell harder again as VW-owned automaker Audi said 2.1 million of its diesel cars worldwide are fitted with the same testing software used by its parent to cheat US emissions tests.

Trading down to new 6.5-year lows, platinum prices also extended their discount below gold prices to a new 3-year record.

Base metals giant Anglo American (LON:AAL) meantime sank to its lowest price since floating on the stock market in 1999, while Swiss mining and commodities trading group Glencore (LON:GLEN) sank 29% to new all-time lows – valuing it at 26 pence in the pound compared with the 2011 float – as a new report from South African investment bank Investec said its “gearing” of debt-to-shareholder-equity has reached above 300%, some 7 times its peer group average.

“Although I can expect temporary weakness in gold – the sort we saw during Lehman crisis,” says one bullion bank’s sales desk in a note, “a large move up [of $100-130] could happen intra-day.”

Confessing that “the gold bug in me has bitten quite hard,” the note points to “strong signals from global markets” including confusion over the US Fed’s much-delayed “lift-off” from zero, the slowdown in economic growth, and “exhaustion” in the US high-yield corporate bond market – “a leading indicator of further investor deleveraging in the broader markets…[now threatening] a break down…to a repeat of Lehman crisis levels.”

“Gold’s improvement [is] only technical so far,” counters Chinese-owned ICBC Standard Bank in a precious metals note, pointing to last week’s loss of “momentum” in the gold chart’s long-term downtrend.

Looking at the latest data from US regulators, “short-covering” by bearish traders closing their bets after the Federal Reserve’s no change decision on US interest rates “started the turn…powering the initial recovery,” Standard Bank goes on.

“ETF flows appeared to be the main driver of the pop up to $1155 last Thursday.”

The giant SPDR Gold Trust (NYSEArca:GLD) last week added to the gold bullion held to back its shares 4 days running – the longest stretch of growth since September 2012.

End-2012 saw the GLD peak by holdings at 1354 tonnes – almost twice Friday’s level of 684 tonnes.

At its peak by value in late 2011, the GLD was the world’s largest ETF, overtaking the US equity market’s S&P500 fund and worth some $75 billion.

Wholesale bullion trading in China – now the world’s No.1 gold mining, importing and consumer nation – was meantime quiet overnight ahead of Thursday’s week-long National Day shutdown.

Three days after Bloomberg said 5 banks – none of whom own vaulting facilities in London – are pushing with the mining-backed World Gold Council for a move to exchange-traded contracts in the world’s wholesale bullion market, Swiss competition regulators said today they’re investigating claims of “collusion” between 6 other banks regarding the “spread” they quote between buying and selling prices in gold.

Gold Bullion Eases After 2-Year Record Jump, Short Interest Evaporates, But Fed's Yellen Says 'Rate Hike Coming by Year-End'

September 26, 2015

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GOLD BULLION held around $1145 per ounce late Friday afternoon in London, nearing its second weekly gain in a row but trading $10 below yesterday’s 1-month high as Western stock markets rose sharply following new comments on US interest rates from Fed chair Janet Yellen.

Bloomberg News meantime reported a private letter from mining-backed market development organization the World Gold Council, plus 5 banks, advising trade body the London Bullion Market Association that they are “assessing” the merits of exchange-traded contracts and centralized clearing for the wholesale gold market – estimated to turn over $60 billion per day.

Heart of the world’s market in large, wholesale bars, London’s bullion trade today remains an ‘over-the-counter’ market, with buyers and sellers dealing directly with each other and so needing to research the other side’s financial stability and establish credit lines.

Settlement of physical bullion trades typically take 2 working days.

Of the 5 banks named, three are direct participants in the electronic LBMA gold price benchmarking auction, four are market-making members of the Association, but none are vault operators or clearing members.

“That [only] five banks out of 18 asked have signed this letter shows we are a long, long way from any agreements,” Bloomberg quotes London precious metals head David Govett at broker Marex Spectron.

As for Thursday’s 2% surge – the second such rise in a week, something not seen since gold prices found a floor in summer 2013 following their worst quarterly drop in 3 decades – “There seemed to be genuine buying under the market all day,” says Govett, “which caught a lot of people short and with the mentality of selling rallies, kept catching them short.”

Surging 140% in the back-half of August, short interest in the iShares Gold ETF (NYSEArca:IAU) shrank 17% in the two weeks ending 15 September, according to data posted by the Wall Street Journal.

Short interest in the larger SPDR Gold Trust (NYSEArca:GLD) shrank 10% over the same first half of September. This week the put-to-call ratio on GLD shares – meaning the number of bearish options bets as a ratio of bullish bets – fell to its lowest in 3 years, according to a separate Bloomberg report.

“Some folks are starting to really worry about whether the Fed rates will raise rates this year,” reckons a quantitative strategist at the $1.6 trillion Wells Fargo Investment Institute.

“You [have] probably got a little bit of room for gold to stage a counter-trend move higher” if the US Federal Reserve again delays its long-awaited ‘lift-off’ from the 0% interest rate now set since end 2008.

Following last week’s surprise ‘no change’ decision, Fed chair Janet Yellen said Thursday that “Most FOMC participants, including myself, currently anticipate [a] likely…initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter.

“But if the economy surprises us, our judgments about appropriate monetary policy will change.”

Long Platinum, Short Gold Trade Sinks on VW 'Confusion' in PGMs, Gold Price Jumps to 1-Month High

September 25, 2015

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GOLD PRICES jumped 1.7% as New York trade started on Thursday, hitting 1-month highs as US equity markets followed Euro stocks sharply lower and platinum-group metals rallied despite a further drop in broad commodity markets.

US Treasury bonds also hit 1-month highs, pushing 10-year yields down to 2.06%.

Bullion’s benchmark price auction in London cleared on strong volume at $1154.50 per ounce – the highest level since 24 August.

Silver meantime leapt 2.7% inside 90 minutes to recover all of the week’s previous plunge, hitting $15.20 per ounce.

Platinum also rose ahead of gold prices, bouncing 2.5% from the morning’s new 6.5-year lows but holding more than 7% down for September so far after the scandal over VW’s diesel-engine emission tests saw the world’s largest car-maker’s CEO resign.

Shares in luxury auto-competitor BMW today dumped 10% in Frankfurt as it denied claims in a German magazine that the X3 SUV breaches European rules on pollution.

“There is a great deal of confusion,” says analyst Tom Kendall at bullion bank and commodities dealer ICBC Standard Bank, warning that this week’s bounce in palladium versus platinum prices misses how “this time last week the concern was – rightly – about slowing vehicle sales growth in China.

“That concern has not gone away. The 3- to 5-year outlook for palladium demand [in catalysts for petrol engines] may have become a little stronger, but we think those who want to play the long game will get a better entry point.”

Looking at the auto-industry, “Just as banks were keen to beef up their compliance and be seen to be doing the right thing following the LIBOR scandal, so too it is imperative that automakers rebuild trust and their reputation,” writes Jonathan Butler, precious metals strategist at Japanese conglomerate Mitsubishi, and also like Kendall formerly at platinum specialists Johnson Matthey.

“Convincing regulators and the public of their green credentials [means] going out of their way to over-engineer emissions devices that genuinely cut pollution – [and] this would be positive for PGM demand, in our view.”

Amongst precious metals investors, “Substantial relative trades [betting] long-platinum, short-gold” had built up earlier this summer, according to BMO Capital Markets in New York.

Latest data from US regulators last week showed speculative traders in the ‘Managed Money’ category holding 3 bullish bets on platinum futures and options for every 2 bearish bets.

On gold in contrast, the number of bearish and bullish bets held by the ‘Managed Money’ group was almost perfectly balanced.

Platinum prices have traded near $300 per ounce above gold on average over the last 10 years. But the white metal today held more than $200 below, near to its record-wide discounts of late 2011.

Starting from a discount of $50 per ounce earlier in 2015, “Long platinum, short gold” had been a favored trade recommendation for some brokers and analysts.

Gold priced in Sterling meantime fixed at a 3-month high of £756.75 per ounce on Thursday afternoon as the Pound fell hard on the FX market.

Recovering all of July’s drop, and gaining 9.1% from early August’s new 5.5-year low, that also put the gold price in British Pounds level with its start to New Year 2015.

Gold Rallies 1% as China Slowdown Worsens, India's Diwali Demand 'Will Grow 15%'

September 23, 2015

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GOLD PRICES rose 1% against the US Dollar in Asian and London trade Wednesday, recovering two-thirds of the earlier drop from last Friday’s near-3 week highs after new data said China’s economic slowdown is worsening.

Platinum rallied 0.5% from yesterday’s new 6.5-year lows as German prosecutors began an investigation into car giant VW faking test results for cutting emissions from diesel-engine vehicles, the metal’s primary use.

Gold priced in Euros rose near yesterday’s new September highs at €1016 per ounce as the single currency dipped below $1.11 on the FX market – more than 3 cents beneath last week’s peaks.

The Caixin PMI survey meantime showed China’s manufacturing sector shrinking at the fastest pace since the global meltdown of early 2009.

State-owned mining and processing conglomerate China National Gold Group today became the first Chinese member of market-development organization the World Gold Council, joining major Western producers Barrick, Newmont and GoldCorp and 14 other leading producers.

“The Chinese gold market,” notes the World Gold Council in its announcement, “has grown exponentially over recent decades and China is now the largest market for gold, in terms of both supply and demand.”

Specialist consultancy Metals Focus, however, expresses “caution towards Chinese demand” for 2015 in its latest Precious Metals Weekly, saying that “our meetings with local contacts point to continued weakness of gold demand amid a slowing economy, particularly in light of poor consumer sentiment in the aftermath of the equity slump.”

World No.2 consumer India, in contrast, shows “a more positive outlook…although concentrated in the jewellery sector.

“The local investment segment is likely to remain disappointing.”

India’s total gold demand between now and New Year could reach the highest level since 2012, Bloomberg quotes Bachhraj Bamalwa of the All India Gems & Jewellery Trade Federation, forecasting a 15% annual rise in Q4 buying, which includes the key Diwali festival.

“Indian gold demand traditionally peaks in the fourth quarter,” explains Germany’s Commerzbank in its daily commodities note, “because the festival season begins at the end of September and the wedding season starts in November.

“Increased gold demand in India and China should lend support to the gold price.”

New data meantime showed consumer prices in neighboring Singapore recording deflation for the 10th month in succession, down 0.8% last month from August 2014 – the deepest drop since the global financial crisis.

Gold Bullion Drops with Dow as Dollar Gains, Commodities Sink, 'Supply/Demand Near Equilibrium'

September 23, 2015

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GOLD BULLION dropped 1.3% against a rising US Dollar in London trade Tuesday, falling to a 3-session low of $1122 per ounce as Western stock markets sank with commodity prices.

Copper lost 3.9% and silver bullion lost 3.3% to approach 1-week lows beneath $15 per ounce – a new 5-year low when first breached last November.

New York’s Dow Jones stock index dropped over 200 points at the open, falling 1.3% to near 2-week lows.

Platinum meantime lost 3.4% on the day, pushing the metal – most heavily used to reduce emissions from diesel engines – to its widest discount to gold bullion since the early 1980s as the scandal over VW’s false emissions tests widened beyond the US.

“Gold swept down in London,” says one bullion bank’s note, “and [is] looking vulnerable to further losses.”

Major government bond prices rose in contrast on Tuesday, driving 10-year Treasury yields down towards their lowest level of the last month at 2.16% per annum.

A near 2-week high in the US Dollar against the Euro helped gold bullion hold around €1007 per ounce – unchanged for the week so far.

New data from Switzerland meantime showed the world’s central bullion refining nation almost doubling its exports of gold to China and Hong Kong last month from July, totaling some 36 tonnes.

Swiss gold exports to India were larger at 66 tonnes, matching the previous month’s figure.

“Some supply and demand fundamentals,” says a note from Swiss bank and major bullion shipper UBS, “suggest that the gold market is nearing equilibrium.”

More importantly for price outlook, US real interest rates – accounting for inflation – “may settle lower versus previous cycles and versus current market expectations,” UBS adds.

“[US Fed chair] Janet Yellen killed [last] week’s equity rally,” says a note from Swiss refining and finance group MKS’s trading desk on the central bank’s failure to raise rates from zero, “by bringing front and centre the very things investors had hoped to get past: murkiness over the global economy and [over] interest rates.”

After the longest run of no change since June 2014 however, bullion holdings for the world’s largest gold ETF – the New York-listed SPDR Gold Trust (NYSEArca:GLD) – shrank half-a-per-cent on Monday to below 675 tonnes, a new 8-year low when first reached earlier this summer.

“Gold [priced in Dollars] has recovered off to the 6-week support line,” reckons a technical analysis from Karen Jones at Germany’s Commerzbank, “and is well placed to challenge the 2015 downtrend [now] at $1150” per ounce.

Gold Price Slips as Indian Savers, US Fund Managers & ETF Traders 'Lack Clear Cut View' Post Fed's 'No Change' Decision

September 22, 2015

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GOLD PRICES slipped $10 per ounce in London trade Monday, falling from the highest weekly close in four as world stockmarkets edged higher after slumping in reaction to the US Federal Reserve’s “no change” decision on raising Dollar interest rates from zero.

San Fran Fed president John Williams told a conference at the weekend that last week’s no-change decision was “a close call”.

Non-voting St.Louis Fed president James Bullard today told CNBC that “There’s a powerful case to be made that it’s time to raise interest rates,” perhaps at the October meeting.

Atlanta Fed president Dennis Lockhart – widely recognized as a ‘hawk’ favoring higher rates – gives a speech later on Monday. Fed chair Janet Yellen will give a speech Thursday.

Further talk of a possible Fed hike by year-end “should keep a lid on any gold rally for the moment,” says a note from David Govett at brokerage Marex Spectron in London.

“[So] at this particular juncture I really have no clear cut view about precious…[but] I don’t see prices collapsing either and think we will continue to trade a roughly $1100-1150 range for the time being.”

Households in India – the world’s heaviest buyers of gold – are also “not finding it easy to take a view on gold,” according to S. Subramaniam, CFO of the country’s largest jewelry retailers, Titan, denting demand as the traditionally strong Hindu festival season approaches its peak with Diwali in mid-November.

“Gold prices themselves have been erratic,” Subramaniam says. “People don’t know if it will continue to fall or begin to move up.”

Amongst Western fund managers, “The prevailing sentiment appears to be one of disinterest regarding gold,” adds Tom Kendall, strategist at Chinese-owned ICBC Standard Bank’s London commodities unit.

Gold held to back the SPDR Gold Trust (NYSEArca:GLD) – the world’s largest exchange-traded fund at its 2011 peak, halving since then – ended Friday unchanged at 678 tonnes for the seventh session running.

That’s the longest stretch of “no change” in the GLD since June 2014.

Speculative traders playing gold prices using Comex derivatives, in contrast, cut their bullish bets and grew their bearish shorts in the run-up to last week’s US Fed decision on rates.

The net speculative position however – of bullish minus bearish bets held by non-supply-side traders – was still larger than July’s 10-year low going into the Fed announcement, according to latest data reported to US derivatives regulator the CFTC.

Silver meantime bucked the 0.5% drop in gold prices on Monday, edging higher to $15.22 per ounce and holding a 6.4% jump from last Tuesday’s 3-week low.

Bullion Extends Post-Fed Jump as Equities Slide, Yellen 'Blew Chance for Lift Off'

September 19, 2015

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BULLION prices extended their surge Friday in London, reaching 2- and 3–week highs as world stock markets fell hard following the US Fed’s decision not to raise Dollar interest rates as previously forecast.

Gold bullion touched 3% gains for the week at $1140 per ounce as New York equities dropped 1.4% at the open, while silver touched $15.42 – up nearly 5.5% from last Friday.

The Euro meantime cut its earlier jump to 3-week highs vs the Dollar on the FX market, helping the gold price in Euros recover to €1000 per ounce after dipping below that level for the third time this year.

Forecasting a swift test of the multi-year Dollar price downtrend – now coming in around late August’s high of $1170 per ounce – one bullion bank’s sales desk today says “Miners are on the sidelines, looking and waiting” for higher prices.

“I guess they have a target at $1200 where some chunky [gold producer] hedging could materialize.”

For the stock market, in contrast, “The Fed had an opportunity to hike rates and begin to build a cushion,” says a note from interest-rate analysts at Bank of America Merrill-Lynch, “should the global slowdown [prove] severe.

But now “the rumbles of never being able to increase rates will become even more exaggerated…Expect there to be more market volatility, more uncertainty [and] therefore more downside risk.”

Bullion market analysts were however more circumspect about financial risk Friday, with London brokerage Marex Spectron saying “The world is exactly the same as it was yesterday, so quite frankly there is no massive reason to get overly bullish of the precious complex.

“At some point in time the US will raise rates and as such the upside for gold will continue to be limited.”

“This decision has not altered our view,” agrees Dutch bank ABN Amro. “We remain negative on gold [because] the Fed will start its tightening cycle this year or early next.

“Investor demand [for gold] is mainly driven by sentiment in financial markets [and] if the Fed eventually hikes in December, as we expect, then the US Dollar and yields should move up.

“We expect jewellery demand from India and China to increase,” ABN adds, “but this will unlikely compensate for lower investor demand.”

On the contrary this week, “Physical gold demand in India is clearly weak,” says a note from Germany’s Commerzbank, pointing to a discount on local gold compared with world prices in London “already amount[ing] to as much as $10 per troy ounce.

“[This] is surprising given that the [Hindu] festival season is just around the corner.”

Premiums for gold in China in contrast – now the world’s No.1 consumer market, ahead of the historic leader India – today closed the week $4 per ounce above London quotes on solid trading volumes in Shanghai.

The Russian central bank meantime said Friday it added $1.1 billion of gold to its reserves last month, taking the total to 1,318 tonnes.

Currently the world’s 6th largest national holder, Russia was overtaken by China’s restatement of gold reserves this summer.

CBR governor Elvira Nabiullina was this week named ‘Central Banker of the Year’ by institutional investment magazine Euromoney, praising her “shock therapy” of free exchange rates and “dramatic” interest rate hikes in “stav[ing] off a collapse in the financial system” late in 2014.

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