GOLD PRICES fell near 3-week Dollar lows Friday as the US currency rose following the strongest reading of consumer sentiment in 11 years on the Reuters/Michigan survey.
China’s main stock market meantime closed 7.4% down on the day, and some 18% down from a fortnight ago, as more brokerage houses tightened their margin trading rules.
Separate data showed French and Italian consumer confidence also rising, but private-sector loans across the 19-nation Eurozone grew only 0.5% per year in May, the European Central Bank said, despite 5% growth in the currency union’s broad money supply driven by the ECB’s new QE bond-buying program.
Erasing the last two weeks’ of gains, Dollar gold prices briefly traded below $1170 per ounce in London on Friday – a 4.5-year low when first hit last October.
“Euro gold is like a rock,” noted one London bullion desk today, “stuck to €1050 for over 3 week now!”
Ahead of Saturday’s latest emergency meeting of Eurozone leaders to discuss the Greek debt crisis, Athens today rejected a 5-month extension of the existing terms of the current €242 billion bail-out.
With Athens due to repay €1.6 billion of bail-out loans to the International Monetary Fund next Tuesday, “The European Union founding principles were democracy, solidarity, equality and mutual respect…not blackmail and ultimatum,” said Greek prime minister Tsipras today.
“It is not political blackmail,” countered European Council president Donald Tusk. “We are very close to the day when the game is over. This is fact.”
“Many [such] ‘deadlines’ have passed without agreement,” note analysts at US investment bank J.P.Morgan, and “there is again a sense in which this ‘deadline’ is artificial.”
Back in the gold market, “Demand was muted during Asian trade,” says Swiss refining group MKS’s trading team, “as participants looked to position themselves ahead of the final round of debt negotiations between Greece and European creditors on Saturday.”
But in terms of transactions, three days of strong turnover in the Shanghai Gold Exchange’s domestic kilobar contract were followed by record-high volume on Friday, with its premium over comparable London quotes doubling from yesterday to $2.60 per ounce.
“More people getting involved,” says one London bullion bank, adding that exchange-traded trust-fund vehicles backed by gold saw strong inflows on Thursday – “a clear sign that investors are concerned about major macro risks, i.e. Greece, Europe, China.”
Tonight’s positioning data from US regulator the CFTC, in contrast, will likely give analysts “only little direction” from the stance of leveraged futures and options speculators, says another major bullion bank’s sales desk, because “clearly the Comex market in New York has been deserted by investors” with activity slipping.
The unleveraged SPDR Gold Trust (NYSEArca:GLD) yesterday added more metal than any day since early February to back the value of its shares, with the ETF’s total holdings growing by 1.5% from a week ago to reach 713 tonnes – the largest level since the start of this month saw a complete reversal of 2015’s earlier 9% growth.
iShares Silver Trust (NYSEArca:SLV) also added metal this week, swelling to the largest size by weight since late April at 10,236 tonnes.
By value, however, the SLV’s asset-under-management held near a 2-week low of $5.2 billion as the trust fund’s growing holding was offset by falling prices.
