GOLD BULLION retreated to new 1-month lows beneath $1130 per ounce Tuesday in London, dropping some 5.6% from mid-October’s peak as world stock markets edged back from new 2.5-month highs.
Silver bullion held just above Monday’s new 1-month low at $15.30 per ounce – more than a Dollar below last week’s spike to 4-month highs.
New York’s Nasdaq index – which rose 95% in the six months ending with the peak of the “Tech Stock Bubble” in March 2000 – closed Monday at fresh 15-year highs.
“The [stock] market’s fear of crashing has left it thrashing around looking for the merest hint of danger,” says UK hedge-fund manager Hugh Hendry of Eclectica Asset Management, famous for recommending that investors “do panic” during the first Eurozone banking crisis and currently showing an 18% annual return to clients of his £30 million Absolute Macro fund ($46m).
“And yet nada…The weeping prophets have failed to force a crisis after one hell of a go.”
“As a US investor, I don’t really see either of [Dollar weakness or inflation] problems occurring right now,” CNBC quotes Andrew Burkly, head of portfolio strategy at $282 billion Oppenheimer asset management.
“I’m still pretty bullish on equities until the year end, so I would recommend not having a gold position here.”
“The worst is over price-wise,” says bullion broker Marex Spectron’s David Govett in a note today, “but it is not time to once again invest.
“Time and time again people seem to be drawn into gold and silver,” Govett adds of the August to October rally, “[but] in traditional bullion fashion the markets have given up the majority of their gains and we find ourselves back in the doldrums.”
Short term, “Expect the usual jumpy moves” he advises ahead of Wednesday’s ADP report on US jobs hiring in October, and then “most importantly [official government estimates of] Non-Farm Payrolls on Friday.”
“Gold’s sensitivity to the unemployment report remains high,” agrees a bullion-market note from analysts at Asia-focused UK bank Standard Chartered – now cutting 1 job in 6 worldwide and seeking to raise new capital from the stockmarket – “and an increase [in US hiring] is likely to pressure [gold] prices even lower.
“Our economists expect the Fed to hike in December.”
But while “there will be some form of impact,” reckons Sandeep Biswas, CEO of Newcrest Mining – the world’s 6th largest gold miner by output in 2014 – “I think the market has already factored a lot of that already in the price.”
As a group with Newcrest’s peers, Australian gold mining stocks rose 85% on the ASX over the 12 months to mid-October notes the Sydney Morning Herald.
Gold bullion priced in Australian Dollar rose 22% over that period.
