GOLD PRICES slipped $10 per ounce in London trade Monday, falling from the highest weekly close in four as world stockmarkets edged higher after slumping in reaction to the US Federal Reserve’s “no change” decision on raising Dollar interest rates from zero.
San Fran Fed president John Williams told a conference at the weekend that last week’s no-change decision was “a close call”.
Non-voting St.Louis Fed president James Bullard today told CNBC that “There’s a powerful case to be made that it’s time to raise interest rates,” perhaps at the October meeting.
Atlanta Fed president Dennis Lockhart – widely recognized as a ‘hawk’ favoring higher rates – gives a speech later on Monday. Fed chair Janet Yellen will give a speech Thursday.
Further talk of a possible Fed hike by year-end “should keep a lid on any gold rally for the moment,” says a note from David Govett at brokerage Marex Spectron in London.
“[So] at this particular juncture I really have no clear cut view about precious…[but] I don’t see prices collapsing either and think we will continue to trade a roughly $1100-1150 range for the time being.”
Households in India – the world’s heaviest buyers of gold – are also “not finding it easy to take a view on gold,” according to S. Subramaniam, CFO of the country’s largest jewelry retailers, Titan, denting demand as the traditionally strong Hindu festival season approaches its peak with Diwali in mid-November.
“Gold prices themselves have been erratic,” Subramaniam says. “People don’t know if it will continue to fall or begin to move up.”
Amongst Western fund managers, “The prevailing sentiment appears to be one of disinterest regarding gold,” adds Tom Kendall, strategist at Chinese-owned ICBC Standard Bank’s London commodities unit.
Gold held to back the SPDR Gold Trust (NYSEArca:GLD) – the world’s largest exchange-traded fund at its 2011 peak, halving since then – ended Friday unchanged at 678 tonnes for the seventh session running.
That’s the longest stretch of “no change” in the GLD since June 2014.
Speculative traders playing gold prices using Comex derivatives, in contrast, cut their bullish bets and grew their bearish shorts in the run-up to last week’s US Fed decision on rates.
The net speculative position however – of bullish minus bearish bets held by non-supply-side traders – was still larger than July’s 10-year low going into the Fed announcement, according to latest data reported to US derivatives regulator the CFTC.
Silver meantime bucked the 0.5% drop in gold prices on Monday, edging higher to $15.22 per ounce and holding a 6.4% jump from last Tuesday’s 3-week low.