Gold Prices Down, Dollar Near 14-Year Highs After Fed's Yellen Speaks, Berlin Atrocity

GOLD PRICES fell on Tuesday lunch time as the dollar bounced back towards 14-year highs, boosted by upbeat comments by the Federal Reserve Chair Janet Yellen last night after yesterday’s incidents in Turkey and Germany.

“You are entering the strongest job market in nearly a decade,” Yellen told graduates at the University of Baltimore on Monday.

“It seems like she is acknowledging the continued improvement in the jobs market. That’s pretty consistent with what she and other policymakers have been saying,” said Eric Viloria, currency strategist at Wells Fargo Securities in New York told Reuters.

Police in Berlin said terrorism was probably behind last night’s lorry attack that killed 12.  Chancellor Angela Merkel commented this morning that it would be hard to bear if the attacker was a migrant given shelter in Germany.

Last month Merkel said she will be seeking a fourth term as Chancellor in 2017 against the backdrop of a surge in the far-right and the pressures caused by the influx of more than one million migrants.

The Ankara policeman, who killed the Russian ambassador to Turkey Andrei Karlov yesterday, was apparently protesting Russia’s involvement in Syria’s Aleppo crisis.

The dollar index, which measures the greenback’s value versus the euro, yen and four other currencies, is up 0.27 percent at 103.420 at Tuesday lunch time.

The greenback climbed broadly but its gains were strongest against the yen, which slid around 1 percent after the Bank of Japan kept monetary policy unchanged. The yen had surged along with the Swiss franc on Monday in the wake of the attacks in Turkey and Germany.

The 10-year USD yield fell back to 2.57%, after briefly soaring to 2.64 % last Thursday and after hitting its highest since September 2014.

European stocks rise to 2016 highs as Italian banks swung higher after news the county’s government is preparing a bailout package for struggling banks.

The gain came as the government said late Monday it would seek parliamentary approval to borrow up to €20bn (£17bn) to support its fragile banking sector and potentially rescue Monte dei Paschi di Siena, the country’s third-largest bank.  The bank needs to raise €5bn in fresh capital by the end of the month.  If it cannot arrange a private sector bailout, a state rescue may come as early as this week.

Italy’s FTSE MIB index rose 0.73% outperforming other major European stock bench marks.  Germany’s Dax 30 index, climbed 0.14%, France’s CAC 40 index gained 0.47% and FTSE199 is up 0.38% at Tuesday lunch time.

Outflows from gold ETFs continue. Gold ETFs increased their holdings from 1050 tonnes at the beginning of the year to 2003 tonnes just before the US presidential result.  It is now 1798 tonnes 40 days later, according to Bruce report of Yuichi Ikemizu, ICBC Standard Bank Tokyo Branch Manager.

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 1.06 percent, the 22th down day of 27 trading days to 828.10 tonnes on Monday.


This publication is for education purposes only and should not be considered either general of personal advice. It does not consider any particular person’s investment objectives, financial situation or needs. Accordingly, no recommendation (expressed or implied) or other information contained in this report should be acted upon without the appropriateness of that information having regard to those factors. You should assess whether or not the information contained herein is appropriate to your individual financial circumstances and goals before making an investment decision, or seek the help the of a licensed financial adviser. Performance is historical, performance may vary, past performance is not necessarily indicative of future performance. This report was produced in conjunction with ABC Bullion NSW.

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