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Gold Trading Quiet as Price Hits 7-Week High After Fed Minutes, Seen Below $1000 in 2016

GOLD TRADING in London saw prices hold firm on Friday, recording the highest weekly close at the benchmark LBMA auction in 7 weeks at $1151 per ounce.   World stock markets also rose to 7-week highs in aggregate following Thursday's release of minutes from the US Federal Reserve's September policy meeting, which showed only 1 member out of 10 voting to raise interest rates from 0% as previously hinted and expected.   Trading some 0.9% higher from last Friday afternoon's benchmark, today's auction took only 1 round to find its market clearing price, with the bid volume worth $89.8 million – barely half the July-September average.   Gold trading in Shanghai had earlier risen a little following yesterday's return from the National Day 'Golden Week' holidays. Silver volumes were higher again, touching fresh multi-month highs.   Silver's benchmark price in London – also discovered by electronic auction on behalf of trade body the London Bullion Market Association – today found its highest level since mid-June at $15.99 per ounce.   The LBMA's executive management London today issued a request for information from "potential solution providers" after a strategic review of the City's bullion market – heart of the world's wholesale trading – advised it seek "greater attract greater liquidity [and] to increase efficiency and lower the costs for institutions of doing business."   Latest data from the UK's tax authorities today showed net outflows of 112 tonnes from London's specialist gold bullion vaults in August – the sharpest drop since last November's near 5-year low in prices – as the monthly average in Dollar terms hit fresh 5.5-year lows at $1117 per ounce,   Now totalling 300 tonnes in 2015 so far, gold bullion outflows from London are 50% ahead of the same period last year.   The gold price crash of 2013 saw a net total of 1,439 tonnes of large, 400-ounce bars leave the UK, primarily destined for Asian markets via re-casting into kilobars in Switzerland.   "Looking at 2016," says a new precious metals analysis from French investment and bullion bank Natixis, "we believe the price of gold will continue to be heavily influenced by the Fed’s interest rate decisions."   Despite last month's delay, "Rising interest rates increase the opportunity cost of holding gold," Natixis' analyst Bernard Dahdah goes on, forecasting an average 2016 price of $990 per ounce and saying that "demand from central banks and China are expected to remain weak compared to previous years [while] supply from physically-backed ETPs is expected to continue at a slow pace."   Gold imports to India – to which Natixis says it is one of the largest suppliers – reportedly fell over 50% in September from a surge in August, according to Bloomberg News today, retreating towards previous monthly averages at 67 tonnes.

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Bullion Steadies from China Drop, 'Sentiment Changing' Even as Silver ETF Shrinks Again

BULLION PRICES rallied from an overnight drop Thursday in London, recovering after China's key markets returned from a week-long holiday to find gold and silver trading 2% and 6% higher respectively in Yuan terms.   Prices fell from the start of trade in Shanghai, dropping 0.8% for gold bullion and almost 4% for silver by mid-morning in Dollar terms in London dealing.   Gold prices then steadied above $1137 per ounce, some 1.4% below Wednesday's new 2-week high.   "Despite consistent selling on this latest rally," says the trading desk at Swiss refining and finance group MKS, "it feels like there is a bit of a change of sentiment amongst traders.   "Investors are not as pessimistic towards the precious."   Dealers at Japanese trading house Mitsui Global Precious Metals meantime say that, using Ichimoku technical analysis, gold prices earlier this week "broke up above the Daily Cloud top...which now lies at $1140.   "The short term trend is strongly positive. [But] gold is hitting resistance from a simple trend line that extends back to the January 2015 high. This is the fourth touch, so a close above $1147 this week would look positive."   Silver meantime recovered Thursday's earlier drop to $15.41 to reach $15.66 per ounce – a level which bullion-bank Scotia Mocatta's technical analysts saw as likely "support" in their Wednesday night comment, because it marked August's high.   The Gold/Silver Ratio – which simply divides the gold price by the silver price, to judge their relative strength – had fallen for 7 consecutive sessions, Scotia's technical note added.   Thursday saw the Gold/Silver Ratio recover as gold held firmer than silver, rising from yesterday's US finish below 71.5 to reach 73 ounces of silver bullion per 1 ounce of gold.   ETF investors meantime again cut their position in silver products Wednesday, extending the drop in the quantity of bullion needed to back the shares to well over 200 tonnes from this time a month ago in the giant iShares Silver Trust (NYSEArca:SLV), taking it to new 3-year lows at 9,802 tonnes.   The leading gold ETF – the SPDR Gold Trust (NYSEArca:GLD) – dropped almost 2 tonnes Wednesday, retreating to a 1-week low at 687 tonnes.   Looking meantime at key consumer gold markets, proposed tax changes in the United Arab Emirates "could hit" what specialist analysts Metals Focus call "improving" demand across the Middle East region, led by Saudi Arabia and – "albeit from a low base" – Iran.

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Gold $1150 'Important' If Not 'Deadly' as Silver ETF Bullion Shrinks to 3-Year Low on 10% Price Jump

GOLD BULLION failed to hold above $1150 per ounce for the second session running in London on Wednesday, edging back to $1145 as silver crept back above $16 for a 10% gain in 1 week.   European stock markets meantime cut earlier gains back near zero for a third day in succession, as New York equities held flat and US Treasury bonds retreating, nudging yields higher once more from last week's sudden spike to 2013 lows after Friday's shock slowdown in US jobs data.   "A failure to break $1150 could hence prove deadly for the remaining year," says one bullion bank's sales desk of the gold price, now "waiting and watching for a decisive break."   That level of $1150 marks "the technically important 100-day moving average" of gold prices, adds German bank Commerzbank.   "If gold conclusively breaks $1150 and holds above," adds David Govett at London brokers Marex Spectron, "then we may see...$1175, but I don't see the price moving much higher than that.   "The market was definitely short last week," Govett adds, pointing to bearish bets against prices being forced to close at a loss on the rise, "and in the wake of the very weak [US jobs data] has had to cover into a very illiquid market...with the white [metals of silver and platinum] leading the way."   Bullion holdings at the giant SPDR Gold Trust (NYSEArca:GLD) were yesterday unchanged despite gold making near 2-week price highs, reflecting constant demand for the trust fund's shares and needing 688 tonnes of backing – some 0.2 tonnes below Friday's 5-week high, but halving from the peak of end-2012.   The largest exchange-traded silver fund, in contrast, shrank Tuesday to a new 3-year low, down 0.5% for the iShares Silver Trust ETF (NYSEArca:SLV) to need just less than 9,856 tonnes to back its shares – also traded like the GLD on the New York Stock Exchange.   Germany's Bundesbank – the world's second-largest national gold holder behind the US – meantime published a 2,308-page PDF listing its entire bullion reserves, stating inventory number, weight and fineness but not brand or bar serial number in a bid to disprove what German media called "conspiracy theories that it has been lying about the amount of gold it holds."   Listing over 95,000 bars it holds in Frankfurt, the Bundesbank also lists the weight and fineness of more than 35,000 bars held at the Bank of England in London for a custody charge, plus 24,500 held at the Banque de France in Paris (all scheduled to be removed to Germany by 2020), and a further 115,431 held for no storage charge at the Federal Reserve Bank of New York.   The Bundesbank's top-line data show an average fineness of 0.997 pure gold in the bars – meeting the minimum fineness of 0.995 set by the international wholesale market's London Good Delivery standards.   The average weight of the bars reported today on the Bundesbank's list also suggest they all meet LGD standards – the largest size in common production – at 402 Troy ounces, some 12.52 kilograms.   New data overnight from Beijing meantime suggested that the People's Bank of China added another 15 tonnes to its gold bullion reserves in September, the third such addition since June, when it announced a 58% rise from 2009 after transferring metal from other accounts.   Slower than August or July, that 15 tonnes remains almost twice the average monthly pace of gold accumulation over the last 6 years.

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Silver Price Jumps 3rd Day, Breaks $16 Level to Hit 200-Day MA Up 10% from End-Sept

SILVER PRICES exploded for a third day running in London on Tuesday, jumping another 3% to reach what technical analysts called key technical levels at $16.05 per ounce and outpacing gold as the Dollar weakened following the worst US trade deficit data for 7 years.   Reversing all of the last 3 month's drop to new 6-year lows against the Dollar, silver also shot higher for Eurozone and UK investors, breaking sharply above €14 and adding almost £1 since a week ago to near £11 per ounce.   With Chinese markets still closed for the week-long National Day celebrations, gold also rose but again lagged silver prices, touching 7-session highs just shy of $1150 per ounce – a new half-decade low when first reached on the way down last November.   New York stock markets meantime fell, and European equities cut earlier sharp gains, after new data showed the US trade deficit yawning to the widest August gap since 2008 at $48 billion on a 4-year low in export sales.   "Short term a rebound is on" in silver prices notes one bullion bank's technical chart analysis today, with the metal peaking 10% above last week's close to September, and gaining over 14% from August's new 6-year lows at $14 per ounce.   Silver turns over one-tenth as much as gold by Dollar value in London's professional bullion market, center of the world's wholesale physical trade.   Daily price history since 1968 show silver moving 1.75% for every 1% move in gold, both up and down.   Bearish betting against silver by money managers trading US Comex futures and options grew 15% in the week ending last Tuesday, latest data from regulator the CFTC say, reaching a gross notional short position of $2.4 billion.   Managed-money long positions held unchanged at $3.1bn, some 29% larger.   Gold futures and options, in contrast, saw hedge-fund and other speculative financial players cut their Comex short bets by 15% last week, down to $8.5bn against bullish bets some 55% greater, equal to $13.2bn of metal.   "Silver's interim low" around the $14 level, says Karen Jones in her Bullion Weekly Technicals for German bank Commerzbank, has been "reinforced [since August's low]  gearing up for a challenge of the 200 day moving average at $16.04" per ounce.   Gold has meantime "tested and seen a strong rebound from the 3-month uptrend at $1104," Jones adds, "and is expected to tackle the 2015 downtrend [now at] $1150."   "Short term," agrees Stephanie Aymes in her technical analysis at French investment and bullion bank Societe Generale, "gold looks poised to inch higher towards $1148/1152 – the descending trend line."   Further "upside [is] limited" however, says Aymes, because the recent August and July highs of $1163 and $1173 respectively on gold's price chart "remain an important resistance.   "Only a break above [that level] will mean an extended rebound" for gold prices.

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Gold Prices Firm, Silver Jumps Again as Odds of Fed Rate Hike Slashed by Weak US Jobs Data

GOLD PRICES eased but held 90% of Friday's $30 jump in London trade Monday, sitting above $1135 per ounce as world stock markets extended the strong rebound in New York equities following last week's surprisingly weak US jobs data.   Japan's Nikkei added 1.8% and France's CAC40 rose 3.5%, while silver jumped ahead of gold prices again, adding another 35 cents to Friday's sudden 80c move to reach 6-week highs above $15.60 per ounce.   "The Fed's credibility is at stake if it fails to move on interest rates this year," says Mitsubishi Corp's precious metals analyst Jonathan Butler, noting that the US central bank has "spent the past two years preparing the markets.   "As such, Q4 could be a difficult one for precious metals if rate rises are priced in."   The chances of a US rate hike by December "have dwindled", says French investment bank and bullion market maker Societe Generale, now putting the odds of a delay until March 2016 at 50-50.   But for gold prices – and with traders in No.1 consumer market China on holiday until Thursday – "physical demand has been muted so far," SocGen goes on.   "The mood is rather to sell into price-strength until the broader sentiment towards gold improves."   Gold shipments into India's western state of Gujarat fell 80% last month from September 2014, the Times of India reports.   US bond traders now price the odds of an October "lift off" from zero at just 1-in-10, Bloomberg News says, citing futures market positioning.   Former US House speaker Stan Collender now sees a 50% chance of a government shutdown in December – such as happened in late 2013 – when the current stop-gap agreement over the debt ceiling expires.    The US Fed lacked the tools to prevent the financial crisis starting in 2007, several senior members told a weekend conference in Boston about "macroprudential monetary policy", and the central bank remains "a long way from being able to successfully use such tools" today.   More banking executives "should have gone to jail", former US Fed chair Ben Bernanke told USAToday on Monday, blaming them for causing what it calls the Great Recession of 2008-2011.   The UK's Financial Conduct Authority – the only regulator so far to identify and fine a bullion bank for 'control weaknesses' inviting a member of staff to try and rig gold prices – now regulates three times as many companies as it did before the crash, an FCA member told a meeting entitled "regulation and responsibility" on the fringes of governing political party the Conservatives' annual conference in Manchester this morning.   Looking at today's gold price charts, "From a technical perspective," says a note from ICBC Standard Bank's commodities team, "Friday’s bounce slowed the downward momentum in gold but a close above $1148 is needed to turn the outlook more positive.   "A move up through $1160 would break a weekly downtrend stretching back to mid-2012 and open the way to $1200."

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