GOLD BULLION held steady in most major currencies Thursday in London, but crept higher to recover half of yesterday’s 1.1% drop against the Euro as the European Central Bank kept its interest rates and QE policy unchanged.
Refinancing rates stay at 0.05%, with deposit accounts at the ECB continuing to cost commercial banks choosing to use it 0.20% per year.
Euro stock markets stayed flat and Eurozone government bond prices slipped on the news, while the gold price in Euros edged up to €1031 per ounce – a 15-month high when first recovered in January.
Dollar gold bullion prices meantime held at $1167 per ounce, some $100 above end-July’s new 5.5-year lows.
“The possibility of a three-digit gold price was talked about more openly,” says a note from Swiss bank and bullion market-maker UBS reviewing this week’s London Bullion Market Association conference in Vienna.
But “there were also more people…starting to warm up to gold,” it adds, citing “disappointment with the Fed’s decision to keep rates on hold in September [plus a surprise] that the possibility of Fed easing and negative interest rates has become part of the conversation.”
Now “cautiously optimistic,” bullion bank HSBC’s analyst James Steel said at the LBMA conference that he now sees gold ending 2015 at $1205, with a rise across 2016 to $1255.
“Over the medium term,” agrees a trading-desk note Thursday from Swiss refining and finance group MKS, “we expect to see gold once again push towards $1200.
“[But] worth noting are the [US futures contracts] option expiries next Tuesday, with a good amount of open interest around $1150 potentially keeping gold prices under pressure.”
Technically, “The recent strong performance is now overshadowed by the proximity of the Weekly Cloud base at $1202,” says a note from Japanese conglomerate Mitsui’s precious metals team, applying Ichimoku analysis.
Wednesday’s 4th gold drop in 5 days “sees current price in a wave 4 correction of the up-move that started in September at $1100,” says Canadian bullion bank Scotia Mocatta in an Elliott Wave analysis.
“Critical pivot lies at $1156 – the top of wave 1. For the sequence to be correct wave 4 cannot breach the top of wave 1. We expect a wave 5 leg higher to $1221.”
Sales from Polyus Gold – the largest miner in world #3 producer nation, Russia – fell 2% in July-to-September from the third quarter of last year, as lower prices outweighed volume growth.
Going into the key festival season in India – the world’s #1 consumer until overtaken by China in 2013 – investment demand has been “badly affected” by gold’s multi-year falls, one retailer today tells Reuters, adding that footfall to her chain’s showrooms has fallen from the same period in 2014.
Now the #1 importer, said MKS-Pamp’s Dubai chief Frederic Panizzutti at the LBMA conference this week, China is “absorbing gold [which] will not leave for the foreseable future.
“Over the medium to long term,” he added in an interview, “it is providing the market with a very solid base for a long-term bull trend.”
