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Gold Trading Holds $1200 as Euro Slips Amid Fresh Greek Wrangling, Shanghai Shares Sink 6%

June 24, 2015
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GOLD TRADING in London on Friday saw Dollar prices hold above $1200 per ounce as the US currency rose against the Euro ahead of an emergency summit called for Monday to try and resolve the worsening Greek debt crisis.
 
With reports saying a further €1.2 billion was withdrawn today by Greek depositors from the nation’s banks – adding to the €3bn already moved this week – “Emergency central bank funding has replaced fleeing deposits,” says Bloomberg, charting European and Greek central-bank inflows to domestic institutions.
 
The ECB today extended its emergency liquidity assistance to Greek banks, Reuters reported.
 
“This is not a game and there is no time for any games,” said president of the European Council Donald Tusk.
 
Euro gold traders today saw the price rise to two-week highs near €1065 per ounce, gaining 1.5% for the week as the single currency eased back on the FX market.
 
Gold trading volumes in Shanghai had earlier jumped to the highest level in 5 weeks as Yuan prices crept higher but the discount to comparable London quotes closed at more than $2 per ounce.
 
“The Chinese [have been] very light buyers” this week according to traders at Swiss refining and finance group MKS.
 
An update from London’s benchmark gold price administrators ICE today said the state-owned Bank of China will begin acting as a direct participant from Monday.
 
Shanghai’s stock market meantime dropped 6%, capping the worst week for mainland Chinese shares since 2008.
 
For Dollar gold traders, Thursday was “the first time in 17 trading sessions we have closed above the 21-day moving average,” noted bullion bank and London market maker Scotia Mocatta, calling the finish above that $1198 level “a bullish development.”
 
Greece’s ruling Syriza party meantime called for anti-austerity protests in  Athens on Sunday, with ministers and officials accusing foreign creditor states of “scaremongering” and spurring a new run on the country’s banks.
 
“These tactics facilitate creditors who want to further blackmail the Greek government,” one official said. “Greece won’t be blackmailed.”
 
ECB board member Benoit Coeure said as talks broke down Thursday night that Greek banks may not be able to open on Monday.
 
“New loans for failed policies – the current joint creditor proposal – is, for [Greece], no adjustment at all,” says US professor James K.Galbraith in a blog.
 
“The Greek government is right to have drawn the line. It has a responsibility to its citizens,” agrees Jeffrey Sachs, a professor at Columbia University and special adviser to the United Nations.

Gold Price Jumps Above $1200 on 'Lower for Longer' US Fed Rates, Dollar Hits 1-Month Low on Euro 'Short-Covering'

June 24, 2015
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GOLD PRICES extended Wednesday’s late Dollar gains in London on Thursday, rising above $1200 per ounce for only the second time this month as the US currency slipped following yesterday’s “no rate hike” decision from central bank, the Federal Reserve.
 
Despite the ongoing Greek debt crisis, the Euro rose to 1-month highs just shy of $1.14 after Wednesday’s new Fed forecasts said US interest rates will stay lower for longer.
 
Targeted at 2.0% per year, US consumer-price inflation today came in at 0.0% per year for May, extending 2015’s zero-to-negative readings and missing analyst forecasts.
 
Greek finance minister Yanis Varoufakis meantime entered the latest meeting with Athens’ Eurozone and IMF lenders saying he would make new proposals to “replace costly discord with effective consensus.”
 
“There’s not much time left,” says Germany’s central-bank president Jens Weidmann in a string of newspaper interviews today.
 
“The ball is now clearly in the Greek government’s court.”
 
“Gold prices reacted positively to Fed chair Yellen’s outlook,” says a note from French investment and bullion bank Natixis.
 
“The Fed is still looking to raise rates this year, but the path of rate hikes could be less threatening than the market had feared.”
 
“Amid the run of bad news about the Eurozone,” says the Hong Kong dealing desk at Japanese trading house Mitsui Global Precious Metals, “it is worth noting that speculators have reduced their gross short bets against the Euro [on the curency market] by 30% from an all-time high this year.”
 
“In fact,” reckons precious metals analyst Edward Meir at US brokers INTL FCStone, “Euro bulls may even use the occasion to boost their holdings further.”
 
However, Meir adds, “any potential Grexit could be considerably more chaotic than the generally complacent tone evident in the markets [suggests] right now, meaning that the Dollar could find a safe-haven bid, thus pressuring gold in the process.”
 
For gold, “as for every other market,” said bullion market-maker HSBC Bank’s analyst James Steel to Bloomberg earlier this week, “this Fed rate hike when it does come has already been priced in.”
 
HSBC’s forex team, Steel went on, “have the view that the Dollar bull market may be in its final phase,” noting that over the last 4 instances of “rising rate cycles…the Dollar tends to pull back” when the Fed first makes a hike.
 
“I think the Dollar continues to get stronger,” countered trading tipster Dennis Gartman on CNBC today, advising investors to buy gold price exposure in non-Dollar terms by hedging into foreign currencies.
 
“We’re only in the 3rd inning of a 9-inning ball game. The Dollar can get demonstratively stronger.”
 
Turnover in Shanghai’s main gold contracts meantime held near 1-week highs on Thursday, but the price ended the day almost level with comparable London quotes, deterring fresh imports into the world’s No.1 producer, importer and consumer market.
 
On the supply side, mining union leaders in former world No.1 South Africa – now responsible for barely 5% of annual world output – today dismissed the idea of a new “social compact” proposed by bosses, saying “We don’t need schemes. We want the money now.”
 
Producing 80% of the world’s new mine output at its peak four decades ago, South Africa already suffers “some of the highest cash costs globally,” says consultancy Metals Focus, meaning this month’s wage talks “could have a significant impact” on its output.
 
Silver out-ran the gains in Dollar gold prices, adding 3% for the week so far.
 
But while Dollar gold rose to $1202 per ounce, Euro and Sterling gold prices held around unchanged from last weekend.

Gold Prices 'Side-Lined' Before Fed as Greece Threatens 'The Big No', Money Managers Choose Derivatives for Protection

June 24, 2015
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GOLD PRICES slipped $5 per ounce ahead of Wednesday’s Federal Reserve statement on US interest-rate policy in very quiet trade, while Western stock markets ticked lower and Greek bond prices rallied despite the odds of a resolution to Athens’ debt crisis worsening.
 
Nearing Monday’s 1-week lows at $1173, Dollar gold prices have now traded within 4% of $1180 per ounce for more than 4 months.
 
Without a new deal, “We will accept the responsibility of saying ‘the big no’ to a continuation of these catastrophic policies,” said Greek prime minister Tsipras in Athens, shortly before meeting Austrian chancellor Faymann – who had earlier expressed sympathy for Greece, saying that some of the lending nations’ demands “[aren’t] in order”.
 
“High joblessness at 30-40%, no health insurance, and then raising VAT on medicines…People in this difficult situation cannot understand that,” said Faymann.
 
New UK data today meantime put annualized wage growth at the fastest pace since late 2011, while unemployment held steady at 5.5% last month.
 
A jump in Sterling on the FX market sent gold priced in Pounds down through £750 per ounce to new 8-month lows.
 
Dollar gold prices have “found support from safe-haven buying,” reckons a note from Canadian-based market maker Scotia Mocatta, “on concerns that the Greek debt saga could potentially end in Greece exiting the Eurozone.”
 
But “despite the protestations of others,” writes London brokerage Marex Spectron’s David Govett, “Greece remains an irrelevance” to bullion trading right now.
 
“The gold market has stalled,” agrees a technical analysis from Commerzbank in Germany, “and is pretty much side lined short term.”
 
Holdings in the major gold-backed ETF trust funds ended Tuesday unchanged, and trading volumes across world bullion markets and proxy investments were again muted today.
 
A day after London bullion market member Bank of China joined global benchmark the LBMA Gold Price as a direct participant, Shanghai’s major domestic gold contract saw its heaviest trade in a week, but it remained 25% below the last 6 months’ average as Yuan prices slipped lower.
 
German insurance giant Allianz’s economist Mohamed El-Erian yesterday put the odds of a Greek “accident” at 55%.
 
A Greek negotiator today told the Reuters newswire that Athens cannot repay the €1.6 billion due to the International Monetary Fund on 30th June without a new extension of bail-out money.
 
Professional money managers have sold stocks and raised cash holdings from 4.5% to 4.9% of portfolios, says the latest Bank of America-Merrill Lynch survey, fearing both a hike in US interest rates and a likely Greek default – with or without exiting the Euro.
 
The same survey says a record proportion of fund managers have also bought derivatives contracts to hedge against a sharp drop in stock markets – greater even than late-2008 on BAML’s records.
 
Almost 7 in 10 believe China’s equity markets are now a bubble.
 
Today the Shanghai stock market rose 1.6%, rallying from Tuesday’s drop to approach new 7.5-year highs, some 60% above New Year 2015 levels.

Gold Bullion Trading 'Hit by Greek Crisis' as Chinese Demand Weakens, 'Price Floor Drops'

June 24, 2015
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GOLD BULLION prices held dead-flat overall in London trade yet again on Tuesday, ending the day at $1181 per ounce but ticking higher for non-Dollar investors as the Euro slipped amid fresh wrangling continued between Athens and Brussels over Greece’s 5-year old debt crisis.
 
Having accused Greek prime minister Tsipras of lying last week about the current negotiations, “The debate in Greece…would be easier if the Greek government would [say] what the Commission is really proposing,” said European Commission president Jean-Claude Juncker.
 
With French president Hollande repeating the creditors’ phrase that “The ball is in Greece’s court” on Tuesday, Athens’ finance minister Vaourfakis said overnight that he won’t make any new proposals at a meeting with Eurozone peers on Thursday.
 
“These days I devote myself,” said German chancellor Merkel meantime, “to the task of keeping Greece in the Eurozone.”
 
The European Court of Justice today found that the ECB’s outright monetary transactions – the precursor to this year’s QE bond buying, announced in 2012 – is indeed “compatible” with European law and treaties over financing government deficits.
 
Greek bond yields jumped to 11-week highs, up 0.75 percentage points on the day, as Athens’ stock market fell 5% for a second day running.
 
“The threat of national bankruptcy in Greece still appears to be leaving the gold market largely cold,” says a note from commodity analysts at Commerzbank in Germany.
 
“The Greek Tragedy is taking its toll on gold trading,” counters one London bullion desk. “Traders are staying away from precious metals in a broad risk-off mood.”
 
Trade body the London Bullion Market Association said Tuesday that China’s state-owned Bank of China has become the 8th direct participant in the daily benchmark pricing process, formerly known as the ‘London Fix’.
 
The first bank to join the LBMA Gold Price auction from China – world No.1 gold miner, importer and consumer nation – Bank of China was a founder member of the Association in  1987, and has been active in the world’s central wholesale bullion market for 40 years.
 
Noting “the weakness of Chinese gold demand so far this year,” analysts at investment and bullion bank J.P.Morgan say that 2015’s “increased price sensitivity likely means the floor has shifted lower” thanks to Asian buyers wanting lower gold prices.
 
“We now believe this level has slid…closer to the $1130 to $1150 per ounce range.”
 
Gold bullion imports to former world No.1 consumer nation India grew 10% by value in May from a year earlier, New Delhi meantime said today, but failed to raise the country’s Current Account Deficit with the rest of the world.
 
India’s yawning CAD was blamed in 2013 for the Rupee’s fall to record lows on the FX market, leading the then-Congress Party administration to impose an effective ban on new imports of bullion.
 
Despite easier rules under the BJP government led by Narendra Modi since spring 2014, Indian customs officials this week said seizures of smuggled gold have jump 5-fold during the last year.

Gold Bullion Stuck Between Greek Crisis & Fed Rate Decision as PIIGS' Bonds Fall, Silver ETF Jumps

June 24, 2015
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GOLD BULLION prices in London trade held unchanged on Monday, as a sell-off in world stock markets continued ahead of this week’s US Fed decision on interest rates.
 
Talks between the Greek government and its bail-out creditors broke down yet again overnight, with both sides blaming the other for refusing to negotiate.
 
Gold bullion traded for London delivery flattened back at $1180 per ounce after an earlier 1.1% drop.
 
Silver meantime rallied back to an overnight high at $16.08 even as broader commodity markets fell.
 
Government bonds from Portugal, Ireland, Italy and Spain all joined Greek debt in falling hard.
 
The Athens stock market ended Monday 5% lower.
 
“Apart from capital controls to avoid bank runs,” notes one London bullion trading desk, “no one really has a good forecast of what will happen and the consequences for global markets, the Euro and – ultimately – gold.”
 
But pointing to Athens’ desperate need for cash, as well as Greece’s 112 tonnes of gold bullion reserves, “remember the potential Cyprus gold sales of April 2013,” the note adds, “which ended up with gold losing 15% in a matter of days.”
 
Looking at this Wednesday’s decision on US monetary policy from the Federal Reserve meantime, “Who knows how [markets] will react to a policy move?” asks an op-ed column from Bloomberg’s Mark Gilbert.
 
Whether the Fed raises rates from 0% for the first time this week, or delays until September as now widely expected, “Maybe they’ll panic and start selling everything in sight, making the 2013 taper tantrum — when Treasuries lost $1.5 trillion of value in a fortnight at the merest hint the Fed would scale back QE – look like a walk in the park.
 
“Or maybe not…The record suggests there’s nothing much to fear from a change in direction by the central bank.”
 
Gold bullion prices have now traded within 4% either side of $1180 for the last 4 months.
 
In futures and options, latest positioning data from US regulator the CFTC show speculative traders cutting their bullish bets – net of bearish contracts – at the fastest pace since November last week.
 
“Gold has drawn limited safe-haven interest,” reckons a note from analysts at London bullion market maker Barclays, “enough to stall the downside.
 
“[But] although gold has edged higher over the past week, the floor for prices is relatively soft, given the seasonally slow period for demand…compounded by continued ETP outflows and the establishment of fresh shorts.”
 
The quantity of gold bullion needed to back shares in the world’s largest exchange-traded gold vehicle, the SPDR Gold Trust (NYSEArca:GLD), ended last week at the smallest level since September 2008.
 
Silver holdings in the iShares Silver Trust in contrast (NYSEArca:SLV) rose again, swelling almost 250 tonnes from late May’s drop to 1-year lows.

$1180 Gold Price Stuck at 2013 Crash Low as US Rate Rise Negates Greek Crisis, Poll Shows German Stance Hardening

June 24, 2015
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GOLD PRICES held tight in London on Friday around $1180 per ounce – the crash low reached in mid-2013 – as Western equities fell and major government bond yields rose again following yesterday’s walk-out of Greek debt talks by the IMF lender.
 
The Dollar slipped versus the Euro, capping gold prices for Greek and German investors alike just below last Friday’s finish at €1054 per ounce – some 1.4% above Monday’s dip to 5-month lows.
 
Athens’ stock market lost more than 5% for the day, erasing the week’s earlier bounce.
 
A new poll for German TV station ZDF today said only 41% of voters actively want Greece to stay in the Eurozone, with 70% saying Athens’ creditors should make no more ‘concessions’.
 
A survey in Greece meantime showed “radical left” party Syriza, currently leading Greece’s government, beating its nearest rival by 14 percentage points in an opinion poll.
 
“We believe that the uncertainty over what will happen to Greece should ultimately result in a higher gold price after all,” says a note from commodity analysts at Germany’s Commerzbank.
 
But with US consumer confidence rising sharply to beat analyst forecasts on the Reuters/Michigan survey today, “Gold and silver have tended to struggle in a rising US real interest-rate and US Dollar environment,” said analysts at former London bullion benchmark participant Deutsche Bank.
 
“We would view an equity market correction and/or a slowdown in the pace of the US expansion as offering the best lifelines to gold.”
 
Crude oil today retreated from this week’s rally near 1-month highs, while sugar prices hit new 6.5-year lows.
 
Copper stayed near its lowest price since mid-March, but held 10% higher from the New Year’s half-decade lows.
 
“The closer we get to this expected US interest rate hike,” Reuters quotes French investment and bullion bank Natixis’ analyst Bernard Dahdah, “the lower the price of gold will get.”
 
The Federal Reserve meets next Tuesday and Wednesday to set policy – the long-awaited June meeting at which several Fed members had previously said they expected to raise rates from 0%.
 
“We still have space for more losses [in gold prices] until September,” says Dahdah, “when the first rate hike should happen.”
 
“The Fed will almost certainly leave monetary policy on hold,” reckon analysts from London-based consultancy Capital Economics, but “markets will watch the statement and subsequent press conference closely for any hints on the timing of the first rate hike.”
 
Meantime for gold prices, “The growing likelihood of a Greek default may also weigh on sentiment generally,” they add, “though we expect it to provide further safe-haven support for gold.”

Gold Investment 'Less Attractive' as Failing Greek Talks 'Don't Matter', Silver ETF Grows as GLD Shrinks to 2008-Crisis Size

June 24, 2015
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GOLD INVESTMENT prices slipped further for Dollar and Euro investors in London trade Thursday, briefly spiking after new US data showed stronger-than-forecast retail sales for May but a surprise jump in the number of people claiming jobless benefits last week.
 
Major Eurozone stock markets meantime added over 1% as government bond prices fell again.
 
Dollar gold prices for wholesale investment bars then fell back through the $1180 per ounce level, seen by technical analysts as ‘support’ from late March to last week.
 
Gold priced in Euros held 1% above this week’s new 5-month low of €1037.
 
UK savers wanting to make a gold investment saw the price in Sterling fall to 4-week lows beneath £760 per ounce.
 
“As investor confidence in global financial stability increases, so does risk appetite,” says a new report on gold’s investment appeal from French bank and bullion dealer Natixis.
 
“Hence the role of gold as a safe haven has become significantly less attractive, even for risk-averse investors.”
 
Both the Bloomberg and Reuters news-wires note that the giant SPDR Gold Trust (NYSEArca:GLD) – the world’s largest ETF by value at its 2011 peak – ended Wednesday needing less bullion to back its shares than any time since September 2008, just when the failure of US investment bank Lehman Brothers marked the steepest phase of the global financial  crash.
 
Neither however note that the iShares Silver Trust (NYSEArca:SLV) again added bullion to its backing yesterday, expanding more than 3% from late-May’s 12-month lows to need 10,168 tonnes of metal.
 
Users of BullionVault, the world’s No.1 physical gold and silver investment provider online, this week grew their aggregate gold holdings to a record 34 tonnes and added another 1.5 tonnes of silver to own 506 tonnes in total.
 
Greek bond yields meantime continued their uptrend Thursday, spiking to late-May’s 1-month highs at 11.88% as Athens’ debt prices fell but holding more than one percentage point beneath April’s 2.5-year peak.
 
Now due to collect €1.6 billion from Athens on the last day of June, the International Monetary Fund said its negotiation team today left talks in Brussels without making any progress.
 
“The ball is very much in Greece’s court,” said IMF spokesman Gerry Rice in Washington, repeating the phrase already used twice this week by Eurozone officials.
 
Greece’s top administrative court, the Council of State, today ruled that pension cuts made in 2012 breached both the country’s own Constitution and the European Convention on Human Rights, and should be reversed.
 
“Greece, with the greatest of respect to those good people,” is an irrelevance within the precious metals markets,” says David Govett in London at brokers Marex Spectron – reportedly now up for sale after returning to profit in 2014.
 
With gold investments “little use as a hedge against global problems,” says Govett, “The metals are being infuenced purely by the Dollar and Fed announcements.”
 
The Federal Reserve’s policy team meet next Tuesday and will announce any change to rates – now held at 0% since early 2009 – the next day.

Gold Prices Hit 'Channel Top' at $1187 as Pimco Dumps Treasuries, Athens 'Not Told' EC Rejects Latest Reform Plan

June 24, 2015
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GOLD PRICES gained almost 1.4% against a weakening US Dollar in London on Wednesday, but held flat for Euro investors as the Greek crisis entered its “final push” and government bonds sold off again worldwide.
 
Western stock markets rose over 1%, but Shanghai’s stock market closed the day slightly lower after global equities-index provider MSCI last night delayed adding mainland Chinese stocks to its emerging-markets benchmark, citing “a few important remaining issues” for the push-back to 2016’s review.
 
Greek officials said they didn’t know Eurozone lenders had rejected Athens’ latest reform proposals until a press conference in Brussels today, reporting that they’d been told to re-work the plan.
 
“For this final push,” said European Commission spokesperson Margaritis Schinas to the news conference, “the ball is now clearly in the court of the Greek government.”
 
With the Dollar stabilizing at $1.13 per Euro, gold prices edged $5 lower from 1-week highs above $1192 in London’s afternoon trade, while silver retreated 20 cents from a rally to $16.24 per ounce.
 
“If one of the reason why Eurozone yields have been on the rise,” says a fixed-income note from US investment bank BNY Mellon, “is the threat that the rest of the region will, in one form or another, end up being responsible for Greece’s debt then it also follows that an actual default by Athens (whether or not it actually leaves the EUR) could see regional yields spiking smartly higher.”
 
Eurozone government bond prices fell yet again Wednesday, pushing 10-year German Bund yields above 1.0% for the first time since September.
 
Ten-year US bond yields reached 8-month highs however, rising near 2.5% ahead of the Treasury selling $21 billion in new debt today.
 
California-based investment management giant Pimco last month slashed its exposure to US Treasuries from 24% to below 9% in its $107 billion Total Returns Fund.
 
“By reflating the liquidity boom through huge monetary largesse,” says Steven Barrow at trading division ICBC Standard Bank in London, “policymakers have…pushed the value of money down significantly against financial and real assets like stocks, bonds and houses.
 
“If Dollar liquidity is now stalling/reversing through dollar strength and looming US rate hikes, then it makes sense that all asset prices are vulnerable, such as stocks and bonds.”
 
Reviewing the United States’ stronger-than-expected jobs data, “The implication is that the US economy can absorb rate rises from September or October this year,” says a bullion note from trading house Mitsui Global Precious Metals.
 
Gold prices are “trading in a one-month bear channel,” says a note from bullion market maker Scotia Mocatta, “with well-defined parameters at $1158 and $1187.”
 
Any “bounce” to that upper level, says Scotia, would only prove short-lived and “corrective, with current risk for another test towards last week’s low of 1163.”

Remembering the Forgotten: the Weak, the Infirm, the Dispossessed, the Elderly, the Other

June 23, 2015
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A history of Monetary Policy Targets

June 17, 2015
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