Gold Recovers from 6-Day Drop as Crude Oil Above $50 for 1st Time Since November

GOLD BULLION rebounded from its lowest level in seven weeks to $1228.90 per ounce in London trade Thursday, writes Atsuko Whitehouse at BullionVault.

Brent crude oil meantime climbed above $50 per barrel in early Asian trading – the highest price since November 2015 – following a US report which showed a decline in crude inventories and which also helped lift energy and materials stocks.

US stocks advanced for a second straight session yesterday, with the S&P 500 posting its highest close in nearly a month.

The Dollar index was down to 95.170 after hitting a fresh multi-week high of 95.61 on renewed expectations of an earlier -than-expected interest rate hike in the US.

Yesterday, Bloomberg reported Philadelphia FRB Governor Patrick T Harker said he expected two or three rate increases in 2016 as did San Francisco Fed President John Williams on Monday.

Federal Reserve Board Governor Jerome Powell is due to speak today at 1615 GMT and Federal Reserve Chair Janet Yellen tomorrow at 1715 GMT.

IMF’s data revealed that Russia added 16.24 tonnes of gold to its official reserves in April, bringing total holdings to 1,476.7 tonnes. China also added 10.9 tonnes to its reserves, bringing the total to 1,808 tonnes.  Venezuela however sold 34.2 tonnes of gold in February and another 8.5 tonnes in March.  In the first quarter of 2016 Venezuela has sold $1.7 billion of precious metals to repay their debts. 

China’s new benchmark Shanghai Gold Price today showed a premium to London wholesale prices at Dollar equivalent price of some $2.51.

The SPDR Gold Trust (NYSEArca:GLD) the world’s largest exchange-traded gold-backed trust fund was unchanged at 868.66 tonnes on Wednesday after losing 3.9 tonnes on the previous day.  Its holdings, however, have increased 14 times in the last 22 trading days.

Today Japanese Prime Minister Shinzo Abe presented documents to his fellow Group of Seven leaders.  He said they indicated a risk of the world economy falling into a crisis on the scale of the 2008 Lehman shock, unless appropriate policy measures were taken.

The G7 leaders did agree on the need for flexible spending to spur world growth but the timing and amount depended on each country, Deputy Chief Cabinet Secretary Hiroshige Seko told reporters, adding some countries saw no need for such spending.

Britain and Germany have been resisting calls for fiscal stimulus.

Silver meantime gained 1.5% Thursday, rising to $16.46 per Troy ounce at the benchmarking LBMA Silver Price auction after declining for 3 days.  
Major silver miner First Majestic (NYSE:AG) told Bloomberg it sees silver prices surging perhap 9-fold by 2019 to reach $140 per ounce after Canada’s largest silver producer was asked by a Japanese electronics maker to discuss locking in future supplies at current prices.
“For an electronics manufacturer to come directly to us – that tells me something is changing in the market,” said Keith Neumeyer, chief executive officer of First Majestic.
The London Bullion Market Association today announced it is, together with the Bank of England and other official agencies, replacing the current Non-Investment Products code for market participants with a new Precious Metals Code from 2017.
More detailed than the current NIPS code, which also covers FX dealing in London, will apply to all precious metals market participants, and will provide participants with “guidance on best practice.”


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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