GOLD BULLION held above $1230 per ounce in Asian and London trade Friday morning, on track to reverse most of last week’s 0.9% drop as European stockmarkets followed China higher.
Commodity prices rallied for a second day as major government bond prices eased back, but silver headed for its second weekly fall in a row at $15.13 per ounce.
Priced in the US Dollar, gold now stands 18% higher from December’s 6-year lows, gaining more against all other major currencies except the Japanese Yen and the Euro.
Bullion priced in Sterling has gained 27% since then, and it has reversed all of the 2013 price crash against the currencies of 8 from the largest 10 gold-mining nations worldwide, including No.2 Australia.
Even against the fast-rising Yen gold has risen 10% since New Year, with a 14% rise versus the single currency Euro.
“It’s time to buy gold,” says one report of German financial services group Deutsche Bank’s latest view, adding that it sees “rising stresses in the global financial system.
“Buying some gold as ‘insurance’ is warranted.”
Celebrity trader Pete Narajan yesterday bought shares in the Market Vectors Gold Miners ETF (NYSEArca:GDX) says CNBC, where he co-presents the Half-Time Report.
Launched a decade ago, the GDX has now risen 55% in the last 5 weeks, rallying off fresh all-time lows to reach its highest price in more than 8 months.
A broader rally in mining shares helped European stock markets touch 3-week highs Friday morning, newswires report.
Gold-related investment funds this week saw their biggest cash inflows since 2009, according to data from Bank of America Merrill Lynch.
The CME futures exchange yesterday raised the downpayment asked of speculative traders to $4,950 per 100-ounce contract – equal to 4 cents on the Dollar, and now raising the initial margin on these leveraged derivatives some 23% above end-2015‘s six-year low.
Options contracts on those Comex gold futures have given “the biggest bang for the buck” in 2016, says Reuters, with bullish calls betting that gold will hit $1300 per ounce by April rising 1343% since New Year.
“The price for the $1400 strike option has risen 667%.”
Wholesale traders in the Middle and Far East, in contrast, “are mostly sellers as gold in local currencies is sky high,” says one London bullion bank’s sales desk in a note.
But while “capping gold’s upside [that is] not disrupting the momentum. Gold rocks.”
The rally since New Year is “just pure risk and fear,” Bloomberg quotes Wayne Gordon, executive director for commodities and forex at Swiss bank UBS’s wealth management division.
“People are unduly worried.”
Beijing’s politburo has “room” to support the Chinese economy if needed, said People’s Bank of China chief Zhou Xiaochuan overnight at a conference for G20 financial leaders in Shanghai, but “the direction [to reform and rebalance] is not changed” and the PBoC will maintain “prudent monetary policy.”
Bank of England chief Mark Carney meantime warned the G20 meeting that negative interest rates – now applied by the Swiss, Swedish, Eurozone and Japanese central banks – are a “zero-sum game” for global growth, threatening a “beggar-thy-neighbor” currency war of competitive devaluation to try and boost export sales.
