News articles of '2018' 'October'

GOLD PRICES held firm Wednesday in London, trading $10 per ounce above last week’s finish even as the Dollar rallied on the currency market.

Crude oil edged back after 3 sessions of gains amid worsening political tensions over the apparent murder of a US-based Saudi journalist in Istanbul.

Asian equities rose for a second day after October’s 7.9% drop so far on the MSCI index, but European stock markets turned lower again.

The Dollar meantime pushed back the Euro and Sterling from new October highs and edged the Chinese Yuan – currency of the No.1 gold-consumer nation, where bank lending rebounded last month on Beijing’s move to ease monetary policy – back towards last week’s 17-month lows.

Thanks to the Rupee hitting new all-time lows, notes LiveMint, gold prices in India – now the No.2 gold-consumer market, where the Hindu wedding season is now underway ahead of Diwali – have risen 10% so far in 2018.

“Overseas gold has dropped 6%.”

Gold prices today hit $1228 in London trade, matching silver’s 0.7% gain for the week at $14.68 and outpacing platinum, now edging back below $838.

“In spite of [Dollar-gold] price gains over the past week,” says specialist analyst Neil Meader at Metals Focus – launching the independent consultancy’s new Precious Metals Investment Focus 2018/2019 – “it remains the case that professional investors have spent much of this year either shunning the precious metals complex altogether or, over the past month or so, moving to the short side.”

Gold ETF trust-fund holdings last month last month to their smallest since August 2017 according to data from the mining-industry’s World Gold Council.

Hedge funds and other money managers then last week held their largest ever net bearish position on Comex gold futures and options according to data running since 2006 from US regulators the CFTC.

“Economic, geopolitical and financial market developments have mostly tended to be bearish for precious metals,” Meader explains. “In particular, the US Dollar received a boost from further US monetary tightening and growing market consensus of a more hawkish Fed…[plus] the windfall of the tax reform.

“Meanwhile, the trade war between the US and China saw a run emerge on emerging markets, which again boosted the US Dollar and US equities.”

“Some of the headwinds that have weighed on gold this year are likely to persist in the coming months,” reckons Meader at Metals Focus, including “a resilient Dollar, elevated bond yields and subdued inflation…[before] conditions slowly turn positive for gold into 2019.”

Looking for a steady rise in gold prices to average $1310 per ounce next year, “The main trigger [will be] a gradual asset rotation from equities back into gold by mainstream investors.”

Meantime however, “Investors may believe that equities are overvalued but, in the absence of an obvious trigger and the fact the probability of each tail risk is seen as low, there is no rush to jump ship.”

Both Poland amd Hungary meantime – the two European Union member states buying gold for their international reserves this summer – were asked by EU ministers on Tuesday to respond over Brussels’ fears that their governments are breaching “EU values and rules”.

Warsaw’s ruling nationalist Law & Justice Party (PiS) wants to force early retirement on 40% of Poland’s judges in what it calls “reforms” but which the European Commission calls a threat to judicial independence from government.

Last month the European Parliament also triggered so-called Article 7 procedures against Budapest, again worrying over judicial independence and the “deterioration” of democratic values.

The gold price in Euros again challenged August’s highs at €1065 per ounce on Wednesday after the Italian parliament approved the right-left coalition government’s 2019 spending plans, breaching the European Commission’s rules on national deficits.

The UK gold price in Pounds per ounce meantime rose within £1.50 of Monday’s 7-week high at £938 as Prime Minister Theresa May followed a heated debate over her Brexit strategy in parliament by heading to meet EU counterparts in Brussels for what is now a summit with “low expectations” for a resolution according to the BBC.

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 failed to hold a rally above $1190 per ounce for the second day running in London trade Wednesday, dropping back as the US Dollar rose and world stock markets fell again amid fresh worries over Italy’s government deficit and the UK’s impending Brexit from the European Union.

The Chinese Yuan held its lowest value against the Dollar in 17 months despite a senior Beijing official expressing “optimism” about resolving the tit-for-tat trade war tariffs with Washington.

Gold also fell against a weakening Euro, erasing most of last week’s 1.7% gain to trade back down at €1032 per ounce.

Milan’s FTSE MIB stock index meantime fell for the 8th session in two weeks, helping pull the EuroStoxx 600 3.2% below last Wednesday’s close, as Italy’s government paid the highest borrowing cost in half-a-decade to raise a 1-year loan from the bond market.

Investors locked in a yield of 0.94% on €6 billion of new Italian debt.

Greece meantime paid an annualized 0.65% on €625m of 13-week Treasury bills today.

Yields on 1-year bonds from all other Eurozone states – including Spain and Portugal – held well below zero, with investors willing to lose 0.59% of their money to hold Germany’s short-term government debt.

“Should I change my policies – my agreement with Italians – on the basis of what some speculators decide in the morning? No,” said Italy’s deputy prime minister Matteo Salvini of the right-wing Lega Party today, defending his coalition government’s plan for a 2.4% budget deficit in 2019.

Vowing that Italy’s 10-year spread over German Bund yields won’t reach 4 percentage points – a level last seen in the crisis of 2012 – Salvini also said he wants Italian residents to get a tax break on investing in Rome’s debt.

The BTP-Bund yield spread today eased back from Tuesday’s peak, but held near a 5-year record above 3 percentage points.

Italy checking all the boxes in terms of how not to react to a building market crisis; demonise “speculators”; draw tempting lines in the sand; impugn those able to provide a backstop; forlorn pleas for locals to buy debt.

— econhedge (@econhedge) October 10, 2018

The gold price for UK investors meantime fell back to £902 per ounce, just above its lowest level since 2016’s shock Brexit referendum result, as the Pound rallied on the currency market amid rumors that a Brussels-London deal for the UK’s exit from the European Union next March could be announced as soon as Monday.

With the final summit of EU leaders on Brexit due next week, the Pound reached to a 2-week high against the Dollar and a 4-month high versus the Euro.

“Brexit is a serious problem for Scotland,” said Scottish first minister Nicola Sturgeon in a speech to her Scottish National Party (SNP) conference yesterday.

After 62% of Scots voted to remain in the 2016 ballot, “The only solution is to become an independent country,” Sturgeon said.

Brexit could see UK-EU trade fall in half over the long-term, says a new paper from the IW Institute in Cologne, warning Germany’s giant auto-manufacturers in particular.

Leaving the UK is likely to cost London some 5,000 financial jobs said City minister John Glen to a parliamentary committee today, calling the situation “stable” but agreeing with Bank of England estimates.

To prepare for “resilience” in local services around the end-March exit, the UK government is now advertising 3 posts nationwide, calling the work “exciting and challenging” and offering to pay 167% of the current UK national average salary.

UK bookmakers Coral and Ladbrokes both put the odds of a “no deal” Brexit at evens today.

Betting on US interest rates meantime puts a 1-in-4 chance on the Federal Reserve raising the cost of borrowing 4 times of more over the next 12 months, up from below 1-in-10 this time a month ago, according to data from the CME derivatives exchange.

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.