News articles of '2018' 'September'

PLATINUM PRICES outpaced gold and silver again on Friday in London, extending this week’s rally against the falling US Dollar to 5.1% as world stock markets also rose.

China’s stock market jumped over 3%, hitting 4-week highs as analysts said Beijing has built a strong economic “cushion” against its worsening trade war with the United States.

Donald Trump’s ex-strategy advisor Steve Bannon, however, told the South China Morning Post overnight that the White House is aiming to make the trade war “unbearably painful” for China, forcing it to cut tariffs and open its markets to more US goods.

With the Dollar falling to 3-month lows this morning versus the Euro currency Friday morning, gold added $10 for the week to trade at $1205.

Silver doubled that rate of gain to add 1.9% from last Friday’s finish, briefly touching $14.40 per ounce.

Platinum’s gain to $838 meantime cut the metal’s discount to gold prices to a 6-month low on Friday morning at $370 per ounce.

Over the last quarter-century, platinum prices have averaged a premium to gold of $160.

Sister metal palladium also rose Friday but less quickly, hitting 8-month highs in US Dollar terms at $1058.

That trimmed its premium to platinum to $220 per ounce – a gap beaten on only 75 trading days during palladium’s spike above and plunge from $1000 in 2000-2001.

“Palladium continues to be in demand by industrial users and supplies remain very tight,” says a note from Japanese conglomerate Mitsubishi.

“[That’s] reflected by the continuing market backwardation,” with spot prices trading above palladium prices for future delivery.

Looking ahead, analysts at Canadian financial services firm BMO say they “have some worries about palladium being a one-trick pony” – relying for 80% of its demand on gasoline engines, against 40% of platinum’s demand coming for autocatalysts in diesel vehicles – and “as a result, we have palladium back below platinum on a longer-term basis.”

The British Pound meantime hit 9-week highs against the Dollar on Friday, keeping the UK gold price in Sterling terms per ounce unchanged for the week at £913 – some £5 above Thursday’s drop near the lowest price since June 2016’s shock Brexit referendum result.

UK prime minister Theresa May’s so-called “Chequers plan” remains “credible” said a member of her Government today, despite this week’s outright rejection – most notably over the issue of a “hard border” between Northern Ireland and the Republic of Ireland – by both the European Commission and leaders of the other 26 European Union states after meeting in Salzburg.

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 rose to 3-week highs against a weakening US Dollar on Thursday, trading up to $1209 per ounce in London’s wholesale bullion market as equities rose together with commodities and US Treasury bond prices.

As the Dollar eased back – most notably versus emerging market currencies led by the Turkish Lira after a shock interest rate hike – silver also gained, halving the last 2 weeks’ loss to trade at $14.30.

Platinum prices spiked to $810 per ounce, the highest level in a month.

All three precious metals have seen speculative money managers place record bearish bets using Comex futures and options contracts over summer 2018, leading some analysts to predict a “short covering rally” if prices fail to fall further.

Istanbul’s stock market meantime rose 1.5% on Thursday, extending its rally from August’s near 18-month lows, after the Central Bank of the Republic of Turkey hiked its main interest rate by over 6 percentage points to more than 24% per annum, the highest cost of borrowing in 15 years.

With gold priced in Dollars also rising however, domestic bullion prices in the world’s No.5 consumer nation retreated only to TRY 230 per gram, albeit 15% below last month’s new all-time highs.

Looking at developed-world stock market, “Investors do not seem prepared for anything but a continuation of the current upward trend, something that is hard to fathom if US tariffs on $200 billion in Chinese goods go into effect,” says a note from US investment bank Morgan Stanley’s head of investment and portfolio strategies for wealth management Lisa Shalett.

Short term, “We see gold as oversold and the likely beneficiary if recession fears rise,” she says, advising clients to think about “tactically deploying” 3-5% of their portfolios towards the metal.

Long term however, “Gold has not proven to be a good inflation hedge…[its] correlations with stocks and bonds are unstable…[and Morgan Stanley] no longer views gold as a strategic asset class, as it provides no interest or yield – and in the case of physical gold, there is a cost to store it.”

Shalett in mid-May said broader emerging markets looked “a good place to invest.” The MSCI Emerging Markets index has since lost 14% of its value.

“The Dollar is close to peaking” she told Bloomberg in mid-June. It has since risen nearly 3% against the world’s other currencies, recovering January 2017 levels.

Jumping sharply on today’s CBRT news to reach 3-week highs near 6.0 per US Dollar, the Turkish Lira had earlier sunk ahead of the central bank’s decision, coming with 5% of last month’s new record low, after President Recep Tayyip Erdoğan – who yesterday put himself and his son-in-law in charge of Turkey’s sovereign wealth fund – called interest rates a “tool of exploitation”, repeating a phrase which helped spur the currency’s plunge in mid-August.

“If and when the prices fall back to the low TL200’s or below,” wrote specialist analysts Metals Focus in a note late in August, “we believe that [Turkish] investors will start buying again.

“[But] weakness in the Lira will persist and Dollar gold prices will also rebound.

“This suggests that disinvestment, as well as scrap, will grow this year while jeweller demand [for fabrication] is likely to post a double digit decrease.”

The Euro and British Pound were meantime little changed Thursday after their central banks made no change to their monetary policies, keeping their main rates at 0.00% and 0.75% respectively.

The Bank of England’s short statement kept the stock of quantitative easing asset purchases at £445 billion and referred twice to “greater uncertainty” about the UK’s March 2019 Brexit from the European Union.

The European Central Bank repeated its plan to reduce and then end its new monthly QE purchases between now and New Year, before maintaining that €2.5 trillion stock of assets “for an extended period of time…to maintain favourable liquidity conditions and an ample degree of monetary accommodation.”

The UK gold price in Pounds per ounce rose back towards last week’s finish at £924, and the Euro gold price held unchanged from the last 1, 2, 3 and 4 weekends at €1036.

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 tight below last week’s finish in London trade Wednesday, moving around $1195 per ounce as Asian stock markets fell again but European shares gained ahead of tomorrow’s policy decisions from the Eurozone and UK central banks – both expected to deliver “no change”.

Global oil prices rose, with energy traders pointing to both the loss of supply from Iran following new US sanctions over Tehran’s nuclear research program and to Hurricane Florence, now approaching the US east coast and set to make landfall at ‘Category 4’ in North Carolina on Thursday.

Brent crude oil neared $80 and US benchmark WTI rose near $70 per barrel.

Still 5% below July’s 3.5-year highs, that squashed the Gold/WTI ratio of bullion to barrels down near 17, only a little above the 4-year low in gold relative to crude oil hit this summer.

“It is absurd that Europe pays for 80% of its energy import bill, worth €300bn a year, in US Dollars when only roughly 2% of our energy imports come from the United States,” said out-going European Commission president Jean-Claude Juncker in his final ‘state of the union’ speech to lawmakers in Strasbourg today.

Also vowing to boost EU border patrols against illegal migrants, Juncker said he wants “to strengthen the international role of the Euro…[making it] the active instrument of a new and more sovereign Europe.

“There is strong demand for Europe throughout the world,” Juncker also claimed.

“To meet such high demand, Europe will have to speak with one voice on the world stage.”

Members of the European Parliament meantime voted 448 to 197 on Wednesday in favor of Article 7 procedures against member state Hungary, accusing Budapest’s prime minister Viktor Orban of breaching EU values.

The Euro rose but struggled to get back above $1.16 to the Dollar, holding gold prices for Eurozone investors at €1030 per ounce.

Silver meantime held flat around $14.12 after recorded its lowest London benchmark price yesterday since the “anti-arb” flash crash of late January 2016, when the auction process fixed at $13.58 – some 80 cents below spot-market quotes – on a lack of buyers to balance with sellers.

Tuesday’s brief plunge beneath $14 put the Gold/Silver Ratio of the two metals’ prices relative to each other just shy of a 25-year high, breaking above 85 ounces of silver per 1 ounce of gold for the first time since March 1995.

“China [is] again showing little demand” despite the drop in gold prices, says one Asian trading desk.

“There is some selling pressure on the Renminbi, which is affecting gold,” agrees Ronald Leung at Hong Kong traders Lee Cheong Gold Dealers.

“Also, people are reluctant to buy as $1200 is acting as strong resistance after failing to break through the level last night.”

Weaker silver prices have seen investor demand for exposure through the iShares Silver Trust (NYSEArca:SLV) grow that exchange-traded fund to a 14-month high, needing over 10,377 tonnes of backing.

Gold’s 3-month price drop of $100 in contrast has seen the giant SPDR Gold Trust (NYSEArca:GLD) shrink by more than 10%, ending Tuesday with backing of 745 tonnes, the lowest since February 2016.

On the political front Wednesday, Russian president Vladimir Putin claimed that the two suspects wanted by UK police over the attempted murder of a former KGB spy in Salisbury this spring are civilians and who will “soon” give their version of events.

Pro-Brexit Conservative MPs – who now show “no dissent” on wanting to oust Prime Minister Theresa May – meantime said an “invisible” border between Northern Ireland and the Republic could exist post-Brexit thanks to “existing” technology for customs checks and VAT sales-tax payments.

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.