News articles of '2016' 'November'

GOLD PRICES steadied from yesterday’s plunge through $1200 per ounce on Thanksgiving Thursday in London, as quiet trading on the US holiday also saw stocks, bonds, commodities and currencies little changed.

Bullion held to back the value of shares in the SPDR Gold Trust (NYSEArca:GLD) shrank another 13 tonnes Wednesday as gold fell back to its 2013 crash low and investors quit the exchange-traded fund, taking its total holdings to a new 5-month low at 892 tonnes.

The GLD has now shrunk every day since Donald Trump’s US election win a fortnight ago, the longest stretch at 10 sessions running since May 2013.

Net outflows from the GLD – the largest gold ETF – have added 1 weeks’ global gold mining output to supply since November 8.

“Gold prices have dropped below $1200 on the Trump reflation trade,” says a new analysis from Dutch bank ABN Amro’s Georgette Boele, referring to the jump in US bond yields and equity prices.

“We expect the current negative environment to remain in place for gold prices in 2017.

“Investor demand remains the most crucial driver pushing gold prices lower. From an investor point of view there is [now] little reason to hold gold as an investment.”

With gold prices bottoming in December 2015 at $1045 per ounce, ABN’s strategist last year forecast a further drop in gold prices to $900 per ounce by end-2016, writing this January that gold was “no longer a safe haven“.

Gold then began a 30% price rise to July’s post-Brexit peak at $1375, by when Boele had raised ABN’s end-2016 forecast to $1350, predicting in July that “a Trump victory would be bullish for gold prices.”

“I don’t believe it,” meantime says specialist consultancy Metal Focus’ Phil Newman about rumors that the government of India – the world’s No.2 consumer market – may ban gold imports.

“[The rumors] seem to have been started by [India’s] market participants,” he told Kitco News. “Why were they started? We don’t know.”

“Panicked gold traders and jewellers,” The Times of India reported one week ago, “have circulated messages amongst themselves saying the government could ban import of gold for domestic use from early next year.”

The rumors – widely reported since last week by global news-wires – followed the Modi administration’s shock demonetisation of India’s largest banknotes, forcing a cash crunch that has halted business across the nation as people queue outside its banks to transfer their 500 and 1000 Rupee notes for legal tender.

“What is real is that there has been tremendous uncertainty in the gold and silver market in India,” Kitco quotes Newman at Metals Focus.

Amid the global price drop, investors in Western gold markets “are looking for the white knight of the physical [Asian consumer] market,” Newman adds, “and it is hard to see where it is going to come from.”

Silver prices again outpaced gold on Thursday, holding firmer with a 1.3% loss against the Dollar for this week so far at $16.36 per ounce at lunchtime in London.

The iShares Silver Trust (NYSEArca:SLV) – the world’s largest silver ETF – has shrunk by almost 1% since Monday, liquidating nearly 100 tonnes of bullion by end-Wednesday.

That’s equal to more than 1 day’s global silver mine output.

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

GOLD BULLION fell through its $1200 floor of the last 9 months Wednesday lunchtime in London, losing 2.4% before steadying just above $1180 per ounce – the bottom of its 2013 price crash – as the biggest jump in 2 years in reported US orders for durable goods saw the Dollar hit fresh 13-year highs on the currency market.

European stock markets cut their earlier losses as US equities held just shy of new record highs. Commodities also regained a drop – with crude oil reversing a 1% fall – after the Census Bureau said orders for ‘white goods’ such as freezers and washing machines jumped 4.8% last month from September, the fastest rise since summer 2014.

Sales of new homes fell however to a 4-month low, separate figures showed. Last week’s claims for US jobless benefits rose ahead of Wall Street forecasts.

All major government bond prices fell meantime, driving 10-year US Treasury yields up to 2.41%, a new 2016 high, as the Euro currency fell to new 2016 lows near $1.05 on the FX market.

That curbed the drop in Euro gold prices to a 6-week low, down 1.9% for the day at €1122 per ounce.

But priced in Dollars gold fell as low as $1182 per ounce – some $30 down from the start of London bullion trading – just near its ‘double bottom’ at $1180 of the 2013 crash, when bullion suffered its worst drop in three decades.

Silver fell slightly less, cutting its 2016 gain to 19% at $16.40 per ounce – down from a two-year high above $21 in early July.

“Gold has arguably done well to hold on to the $1200 level,” said a note from bullion clearing bank ICBC Standard’s Tom Kendall earlier – “admittedly by its fingertips.”

But with all financial markets likely to see lower trading volumes ahead of the US Thanksgiving holiday tomorrow, “If you were inclined to test [that level], the reduced liquidity with US traders absent would be an obvious opportunity.

“It really does depend on the Dollar…and that big figure for gold may be tested before the turkeys are cooked.”

“Momentum and [moving average] indicators are bearish,” said Tuesday night’s technical analysis from fellow London bullion bank Scotia, “and risk remains to the downside.”

Tuesday saw the 9th successive outflow of bullion needed to back the SPDR Gold Trust (NYSEArca:GLD), the longest such stretch since gold’s 25% price plunge of April to June 2013.

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

GOLD PRICE gains of 4.5% overnight Tuesday were all erased by the close of London trade yesterday, with a $20 rebound then fading on Thursday as world stock markets extended their rally following Donald Trump’s surprise victory in the US presidential election.

Japan’s Topix index closed 5.8% higher, reversing the previous day’s losses, and Eurozone equities rose another 0.5% as the start of Thursday’s US trading approached.

Major government bond prices, in contrast, continued to fall amid analyst talk of Trump’s infrastructure and spending plans – as well as inflation – driving 10-year US bond yields above 2.00% for the first time since January.

Gold prices were then trading at $1114, some 12% below this week’s low-point near $1269 per ounce.

“[Because] the 2011-2016 downtrend has held,” says the latest weekly gold-price analysis from Karen Jones at German financial services giant Commerzbank, “our longer-term bias remains negative.

“A weekly close [in the gold price] above $1339 is required for a credible break of the downtrend [but] in order to negate current upside pressure on the market we will need to go sub-$1269” – the low hit just before Trump’s victory began to become clear overnight Tuesday.

Gold prices touched $1270 late yesterday as the market retraced its entire 4.4% jump, before rallying $20 per ounce in Thursday’s Asian and early London trade.

“We believe that Donald Trump’s win is positive for gold,” says the weekly note from specialist analysts Metals Focus, “[but] it is unlikely to be a game-changer.

Repeating its current $1350 forecast for gold between now and New Year – with a high of $1460 predicted for 2017 – “The uncertainty the new president-elect introduces to domestic, foreign and trade policy of the world’s largest economy and military power should continue to encourage interest in safe haven assets,” says Metals Focus.

“If these culminate in renewed turmoil in global markets…the Fed would be forced to respond [perhaps with a] new loosening cycle…and/or a new round of quantitative easing.”

“Within the stock market,” CNBC quotes Thailand-based investment manager and author Marc Faber, “anything that is commodity-related will do well” as a result of Trump’s stated policies – now posted on an offical dotgov US website.

“The obvious trade is to own Russian and Kazakhstan assets,” says Faber, “for the simple reason that Mr.Trump has a more benign view of the world and respects the perspective of foreign leaders.”

Within the United States however, and “with the debt ceiling looming again,” says a precious metals note from strategist Tom Kendall at bullion clearer and market-maker ICBC Standard Bank, “we think there is very little that President-elect Trump will be able to do to inject adrenaline into the economy in 2017.

“In contrast, he certainly will be able to influence business investment decisions and trade policy…more likely negative than positive.

“So there’s a risk that [rather than raising rates] the Fed will have to grapple with both stronger headwinds to growth and rising longer-term inflation expectations.

“That kind of scenario would certainly be positive for gold.”

“For investors willing to accept the incremental volatility,” adds asset management giant Blackrock’s head of asset allocation, Russ Koesterich, “gold is potentially the more leveraged play under a scenario where inflation expectations rise faster than nominal [interest] rates.

“And, as we’ve seen, gold also comes in handy when unexpected things happen.”

Investor demand for shares in giant gold ETF the SPDR Gold Trust (NYSEArca:GLD) yesterday saw another 5.3 tonnes of bullion needed to back the fund.

The third daily inflow of the last 2 weeks, that took the trust’s total holdings to 955 tonnes – a 3-year high when first reached in the immediate aftermath of the UK’s shock Brexit referendum result.

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

GOLD PRICES held at $1280 per ounce in London dealing as US voters went to the polls Tuesday to choose between Donald Trump and Hillary Clinton, trading above the moving average of the metal’s last 200 days – a key level according to technical chart analysts.

World stock markets held dead-flat after Monday’s 2.5% surge from a record 9 days of losses in the US S&P500 index.

Government bonds also froze, holding interest rates unchanges in quiet trade, while commodity prices slipped again but silver held firmer, trading at $18.29 per ounce.

Shanghai gold prices slipped again, retreating 1% from Friday’s 6-week high against the Yuan as the Dollar consolidated the last 3 sessions’ strong recovery on the FX market.

“Support is at $1278.40 – [the] 200-day moving average,” says a technical analysis of gold price charts from strategist Russell Browne at Canada-based investment and bullion bank Scotia.

“Momentum and [other] indicators have weakened but still remain bullish. I am biased to the upside as long as gold closes above the 200-day MA.”

“It felt like the calm before the storm during Asian trade today,” says the Australian precious metals trading desk of Swiss refining and finance group MKS, also pointing to gold’s 200-day moving average just below $1280 per ounce for immediate technical support.

“We expect muted price action to continue leading into the first poll results. Should Hillary Clinton pull away from Trump, expectations are that $1250 should be supportive for the yellow metal, even more so considering Monday’s weakness having already removed some of the fast money from the market.

“Conversely, should Trump outpace Clinton we expect to see the post-Brexit high of $1375 directly in the firing line.”

“Gold [in October] tested support zone of $1250/1236,” said a chart note Monday from French investment bank and bullion market maker Societe Generale‘s head of technical analysis Stéphanie Aymes, pointing to what was then “the confluence of the 200-day MA and multi-month [2016 upwards] channel.”

Having now “staged a rebound towards crucial graphical resistance of $1307,” says SocGen, “short term [the gold price] is forming a probable double top.

“A move below $1283 will confirm a down move… towards even $1266 [where SocGen pegs the 200-dma]. This will be pivotal support.”

Looking beyond Tuesday’s vote and Wednesday’s result in the Trump-Clinton race for the White House, “Through the US election volatility, we expect that market participants will refocus on the likelihood of a December hike (very high at this point) but more importantly the evolution of interest rates next year,” says a note from Canadian-based TD Securities.

“For now, we still expect that despite a December hike, the Fed will be increasingly conservative next year and leave rates at very accommodative levels.”

Disclaimer

This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.