Your browser (Internet Explorer 7 or lower) is out of date. It has known security flaws and may not display all features of this and other websites. Learn how to update your browser.

X

US Jobs Data Cut Gold Investing's Longest Gains Since April as China Prepares 'to Go Quiet'

GOLD INVESTING prices took their sharpest dive in a week Friday lunchtime in London, dropping $15 per ounce from new 3-month highs as the Dollar rallied – and bond yields rose – despite the weakest reading on US jobs creation since September.   Prices held on track for a third weekly gain however, the longest run of investing gains since April last year.     Non-farm payrolls expanded by only 151,000 in January, the US Department of Labor said as the start of New York trade drew near – well below consensus forecasts of 190,000.   December's growth was also revised lower. But the overall jobless rate edged down near an 8-year low at 4.9%.   "The notable 0.5% monthly increase in wages [and] the reduction in the unemployment rate...serves as a caution to markets that it is too early to take a Federal Reserve March hike completely off the table," says Mohamed El-Erian, chief economic adviser at investing services giant Allianz.   But "we see no compelling reason for more than a normal retracement [in gold]," said an earlier note from investment and bullion bank HSBC.   "The rally is underpinned by risk off sentiment, a weaker US Dollar and a shift in global monetary policy."    US stock futures turned lower as US bonds prices fell following Friday's jobs data, nudging the interest rate offered by 10-year Treasurys up 3 basis points from Thursday's new 12-month low of 1.84%.   Having touched a fresh 14-week high at $1161 per ounce as the US jobs data came in, gold dropped $10 over the next 15 minutes.   That cut gold investing gains to 2.9% for the week.    Silver also slipped, but held 3.5% weekly gains – its third Friday-to-Friday rise on the run – at $14.77 per ounce.   "Gold [has been] currently living up to its reputation as a safe haven in uncertain times," said a note on investing flows from commodity analysts at Commerzbank in Germany early Friday.   The giant SPDR Gold Trust (NYSEArca:GLD) grew again on Thursday, swelling 8% since New Year and now going 20 trading days without a single outflow of bullion.   The GLD last saw a 4-week stretch without any outflows in July 2014.   Meantime in key consumer market China, however, "For the better part of February it will be a quiet time for precious metals business," Reuters quotes one Shanghai bank trader, as next week's Chinese New Year holiday marks the peak season for retail sales.   "Domestic retail demand for bullion has been an important but secondary factor" in China's bullion demand, counters bullion-dealing ICBC Standard Bank's Tom Kendall in a note.   Instead, the Chinese gold market "has been more about financially-driven flows in response to interest rates and spreads," Kendall says, noting that gold has proved "a very efficient vehicle to convert onshore RMB into US Dollar-denominated hard assets parked off shore.   That's neither bullish nor bearish for gold investing, Standard concludes. "But it is a rather different narrative to those that the market is more frequently fed."

meer lezen

Gold Price Jumps with 'Real Money' ETF Investing, Miners Hedge at 3-Month US Dollar Highs

GOLD PRICES jumped to new 3-month highs near $1150 per ounce Thursday lunchtime in London, adding more than $30 for the week so far – but holding little changed for non-US Dollar investors – after ETF trust funds added yet more bullion.   The biggest silver ETF, in contrast, shrank yet again Wednesday, with the iShares Silver Trust (NYSEArca:SLV) now contracting almost 3% since New Year to 2013 levels while the giant SPDR Gold Trust (NYSEArca:GLD) has expanded more than 7% from end-2015's new 8-year lows.   Silver bullion also jumped with gold prices Thursday, reaching 3-month highs above $14.80 per ounce – and adding nearly 4% for the week – as world stock markets steadied with commodity and bond prices, and the US Dollar fell to its lowest value against the single Euro currency since October.   "Driven up by weak US economic data," says German bank Commerzbank's daily commodities note, "gold rose above the technically important 200-day moving average [Wednesday], sparking technical follow-up buying."   "It's been 8 years at least," says one London bullion bank's sales desk today, "since we saw a gold market where producers were hedging, speculators, China and India were buying, and central banks were lending all at the same time."   "Gold ETFs are attracting massive amount of real-money flows year-to-date."   A favored vehicle for US fund managers to gain price exposure during the previous bull market, exchange-traded fund the SPDR Gold Trust (NYSEArca:GLD) yesterday saw its shares in issue swell again, needing another 4.5 tonnes of bullion to back their value.   Reaching total holdings of 690 tonnes, that took the GLD's inflows since New Year to 46 tonnes.   The daily correlation between gold prices and GLD holdings - on a rolling 1-month basis - yesterday reached +0.86, showing the strongest connection since the metal hit fresh 6-year lows at the start of December.   Price-hedging by gold mining companies had already risen 9% in the third quarter of 2015, according to new data today from specialist analysts Thomson Reuters GFMS.   Reversing the drop of Q2 – and taking the global hedgebook across all listed miners to the equivalent of 192 tonnes – the rebound "was overwhelmingly concentrated in an expansion of forward sales," says GFMS, pointing to sales of future production at current prices.   Forward sales – typically done through bullion banks' London offices – accounted for the bulk of the gold mining sector's record-high hedgebook at the start of the 2001-2011 bull market, then equal to 1 year's total output.   But while rising to the highest level since Q3 2012, forward sales at the end of September equalled only 4% of 2015's new record-high global mine output on GFMS's data.   "Trading volumes and price action continue to diminish in Asia in the lead up to Chinese New Year," says the Australian office of Swiss refiners and finance group MKS, "even despite last night's upside break into new territory."   Even with Chinese gold prices rising 1.2% to the highest Yuan value since mid-October overnight, Shanghai gold premiums – over and above international Dollar-price quotes – fell to zero by the close of Thursday's trade.   That premium – which incentivizes local wholesalers to import bullion into the world's second-largest economy and No.2 gold consumer nation – compares with an average $2.50 per ounce over the last 18 months.

meer lezen

Gold Bullion 'Slowly Higher' on Oil, Equity Slump as China's Mine Output Falls 1st Time Since 1999

GOLD BULLION sat tight just below last week's new 3-month highs in London trade Wednesday morning, holding near $1130 per ounce as new data showed China's world-leading gold mining output failing to rise for the first time in 16 years.   World stock markets fell yet again, but crude oil bounced from yesterday's drop below $30 per barrel.   US Treasury bond prices eased back, nudging 10-year yields up 3 points from Tuesday's new 10-month lows at 1.88%.   But Japanese government bond yields fell again as JGB prices continued to rise following last week's surprise move to negative deposit rates by the Bank of Japan.   That took the 10-year JGB yield to just 0.06% by the close of Tokyo trade.   "If you believe that the oil market will continue to fall and that China will remain in the doldrums, gold should continue to move slowly higher," says David Govett at brokerage Marex Spectron in London, pointing to continued gold investment and notably ETF trust-fund demand.   The SPDR Gold Trust (NYSEArca:GLD) needed another 4 tonnes of bullion to back its growing number of shares in issue by Tuesday's close, moving again in lockstep with spot prices.   Silver's largest ETF product, in contrast, shrank once more despite a rally to $14.40 per ounce – repeated on Wednesday – with the iShares Silver Trust (NYSEArca:SLV) shedding four tonnes to a new 3-year low of 9,622 tonnes.   "Gold has probably got another $10 to $20 upside before it rolls over," counters Tom Kendall, head of precious metals strategy at Chinese-owned investment, commodities and bullion bank ICBC Standard Bank, noting how betting in the US interest-rate market now forecasts that the Fed Funds rate from the US central bank will sit below 0.6% this time in 2017.   In other words, "A Fed unable to make more than one hike this year is fully priced in," Kendall explains, adding that "Asian physical [demand] flows have started to fall and will diminish quickly over the next few days" as wholesalers finish selling to retailers ahead of the weekend's peak Chinese New Year shopping spree.   Chinese gold premiums – over and above quotes for bullion settled in London – today edged down towards $1 per ounce, less than half the average incentive offered to importers over the last 18 months.   Trading volumes on the Shanghai Gold Exchange also retreated ahead of next week's Chinese New Year holidays.   China's gold mining output meantime failed to grow in 2015, new data from government-mandated trade body the China Gold Association said today – the first such failure since 1999 according to historic data from specialist analysts Thomson Reuters GFMS.   Still the world's No.1 producer nation, China saw total gold mine output slip 0.4% from 2014's record to reach 450 tonnes, the CGA said.   Private consumption meantime – as identified by the CGA – slowed in the last three months of 2015, pulling the annual growth rate down from 7.8% during the first three quarters to just 3.7% from full-year 2014.   Chinese gold consumption slumped by one-fifth in 2014 from the record of the previous year, according to CGA data, when China's industrial, investment and jewelry gold demand leapt 41% on the spring 2013 crash in gold bullion prices worldwide.

meer lezen

Gold Bars Near Record High vs Crude Oil as Stockmarkets Sink, US Interest Rates Drop

GOLD BARS priced for London settlement – the wholesale market's standard terms – slipped back from new 3-month highs Tuesday morning, trading down from $1130 per ounce as stock markets fell yet again worldwide with crude oil and commodity prices.   Only Shanghai bucked the drop in global equities after the People's Bank injected $15 billion-worth of short-term loans into China's money markets ahead of the usual liquidity squeeze at Chinese New Year, starting next weekend.   Brent crude oil meantime sank 4.3%, and major government bonds rose, pushing the yield offered by 10-year US Treasuries down to 1.93% – the lowest medium-term interest rate since April last year.   Dropping for the 14th session of 22 so far in 2016, European equities have now lost 10% since New Year.   Gold priced in Euros has so far risen 6.1%, while UK investors wanting to buy gold bars have seen the price rise 8.5%, peaking last week at a 9-month high of £792 per ounce but slipping Tuesday below £780.   That marked only the fourth trading day of 2016 to date that gold priced in Sterling has fallen as the FTSE 100 index of leading shares also dropped.   The UK's top 100 listed companies have so far lost 5% of their value in 2016, with giant oil producer BP (LON:BP) losing 8% on Tuesday morning alone after reporting its worst-ever annual loss on the plunge in world crude prices.   "We have been bearish gold since 2013 on a confluence of factors," said a note Monday from metals analyst Michael Widmer at US investment and retail banking giant Bank of America-Merrill Lynch, pointing to the rising US Dollar, falling crude oil prices, low stockmarket volatility and the rise in real interest rates, net of inflation.     "Moving into 2016," Widmer says, we thought many of these trends...may continue to provide headwinds to the yellow metal. Yet concerns over the health of China's economy and activity in the US have pushed prices higher."   Gold's rally may dip on a pause in the stockmarket's drop, BAML concludes, but "we remain steadfast in our expectation that this will be a transitional year, with gold ultimately breaking out of the bear market."   Crude oil, in contrast, is likely to see "another large decline in prices" even if the Opec cartel of producer nations does now agree to cut output, says a note from US investment bank Goldman Sachs. . "It may already be too late for Opec producers [to boost prices] given the likely time necessary to enact such cuts, the continued large builds in US and global inventories, and the fast pace at which US Gulf Coast spare storage capacity is filling."   Priced against crude oil, a 1-ounce gold bar was today worth almost 35 barrels in London trading – a near-record price just shy of the 1973 Oil Crisis high.

meer lezen

Gold Price 'Positive', Extends New Year Jump as 'Clumsy' China Sees Manufacturing Shrink

GOLD PRICES traded up to $1122 per ounce Monday morning in London, adding $4 from Friday’s close as world stockmarkets fell after China's manufacturing sector showed its worst decline in 3.5 years.   Already gaining 5.4% versus the Dollar in January – the biggest monthly jump in a year – gold has so far risen almost twice as fast this year as silver, now adding 3.0% to trade below $14.30 per ounce Monday morning as commodities fell hard once again.   Crude oil dropped almost 4%, back to $32 per barrel, while the broad Rogers International index of raw materials lost 1.4% by the start of New York trade.   "Only gold has been spared the generalised decline in commodity prices," writes multinational financial services firm Allianz's chief economic advisor Mohamed El-Erian in the Financial Times.   "In the context of a rising interest rate outlook in the US, it's going to be very difficult for gold to hold on to these gains," reckons Mark Keenan, French investment bank Societe Generale's head of commodities research in Asia.   "But one positive lesson we can learn from [last] month," says Australian bank Macquarie's metals analyst Matthew Turner, "is that gold does still have a safe-haven role.   "That could stand it in good stead through a testing year to come."    Data from China's National Bureau of Statistics today showed manufacturing activity in the world's second-largest economy contracting for the sixth straight month in January, with responses to its survey of purchasing-managers giving a reading of 49.4 on the PMI index – the weakest since August 2012.   Calling Beijing's policy response to China's slowdown and latest stockmarket crash "clumsy", US Fed voting member Robert Kaplan said he sees "good reason to be patient [and] take more time to assess the impact on the US economy" before raising rates again.   "Strong inflows into gold exchange-traded funds, Chinese buying ahead of the Lunar New Year and support from the volatility in other asset classes combined to boost gold in January," says SocGen's Keenan.   "Maybe things won't be this bad next month in the wider markets," adds Turner at Macquarie. "So it is possible that if ETF flows are subsiding, prices will be lower too."   Although unchanged last week, the number of shares in issue for the world's largest gold-backed exchange-traded fund – the SPDR Gold Trust (NYSEArca:GLD) – rose 4% in January, the biggest growth since January 2015.   That meant the trust needed an additional 26 tonnes of bullion, reaching a 7-week high of 669 tonnes.   Bullion holdings at the iShares Silver Trust (NYSEArca:SLV) in contrast shrank over 260 tonnes to a 3-year low of 9,626 tonnes as investors cancelled 2.6% of the shares in issue last month.

meer lezen

Gold Bear Exhausted? London Trading Leapt on End-2015 Low

December 2015's double-bottom at $1045 saw London bullion volume leap...   HEAVY trading volume can mark key turning points in financial markets, writes Adrian Ash at BullionVault – and gold's bear market set new 6-year price lows on very heavy trading volume back in December.   Says who?   Says the London bullion market, that's who.   For all the bluster about China "taking over" in gold, London's five clearing banks did 3.5 times the volume traded on the Shanghai Gold Exchange in 2015. And turnover amongst those 5 banks – clearing physical bullion trades in London vaults on behalf of the world's wholesale market – leapt over 36% in December from November 2015, new data showed Friday.   That was the biggest month-on-month jump in volume by weight since May 2010.   Oddly enough, May 2010 was the last time the US stockmarket did as badly as it just did in January 2016. Gold, on the other hand, just capped its 4-year bear market with its best monthly rise in 12, gaining 4.8% as the S&P lost 5.6%.   So what? Well, volume matters, because crowd behaviour reveals itself in the quantity of stuff being bought and sold – and when the crowd all chooses to trade, it pays to take note.   That's why Elliott Wave theory looks at volume to check the pattern it sees on financial price charts. Any price movement with relatively high volume is seen as stronger, more relevant, explains Investopedia, than a move made on weak turnover.   Equally, "Declining volume is often a warning that [a] trend is near completion," adds author and tutor John Murphy, while "a solid price uptrend should always be accompanied by rising volume."   So most telling, therefore, December's heavy trading came after the weakest volume in London's bullion market for a decade.   This chart shows month-average prices. And after rising for 11 years running, gold prices fell into a bear market lasting more than 4 years so far, losing 40% from the summer 2011 peak.   But signs are, the selling exhausted itself as winter drew on. December 3rd saw gold fall to $1045 per ounce, a level it then touched again on the 17th to create a so-called "reversal pattern" known as a "double bottom". In the parlance of technical analysis it was then confirmed when gold rose and held in January above the mid-point between those two lows at $1088.   Technical analysts and traders have clearly bought into this confirmation, pushing gold prices higher from end-2015's new 6-year lows as the stockmarket slumped in New Year 2016. But longer-term investors might want to take note as well.   Because the $1045 low – a level long identified as a key point by bullion-market insiders – came after gold trading bullion had slowed to decade lows, only to jump as that double bottom formed.   For now, at least, gold selling by Western money managers and big investors looks exhausted. Maybe more buying will follow. Especially if the stockmarket's change of trend worsens as well.

meer lezen

January Was Gold Price's Best Month in 12, Stockmarket's Worse Since 2010

GOLD PRICES headed for their best monthly rise in a year on Friday, slipping back to $1110 per ounce as world stock markets gained, but trading 4.6% higher from the start of 2016.   Gold's best monthly gain in Dollar terms since January 2015, that contrasts with the 7.4% drop in US equities – the hardest fall in the S&P 500 index since the Greek debt crisis broke in May 2010.     "The long-advocated support of $1045 proved to be significant," says a technical analysis from French investment and London bullion bank Societe Generale, pointing to the 6-year low hit by gold prices both in November and then early December.   "It has been followed by a recovery and more importantly by the formation and then confirmation of 2 bullish reversal patterns – a Double Bottom [at $1045] coupled with an Inverted Head and Shoulder[s]."   With the distance between gold's low point and the 'neckline' of that second pattern projecting a rise of the same amount, "Gold is approaching a first significant hurdle at $1130," SocGen says, /36, the 61.8% retracement of last fall, the upper limit of the up sloping channel in force since last December and the projected target for the 2 bullish reversal patterns.   Friday's drop below $1115 would, on the French bank's analysis, "mean retracement towards $1106 and even $1097/1093."     Fundamentally, meantime, "If you look for good news [in gold] you can find it," writes Tom Kendall at Chinese-owned ICBC Standard Bank – part of the world's largest banking group – pointing to strong Chinese gold import data, growing inflows to Western ETF products, and this week's "moderately dovish" comments from the US Federal Reserve.   "But most of [this] is confirmation of events past.   "Looking forward, we remain sceptical that physical demand will be sufficiently strong to keep the price above $1100 once we reach the [Chinese] Lunar New Year" at the end of next week.   The Bank of Japan surprised analysts and traders overnight by cutting the interest rate it pays on commercial banks' deposits to minus 0.1% - the first negative rate from Japan, which began slipping into deflation over 25 years ago, cutting its key lending rate to 0% at the turn of the century and also beginning QE money creation to try and devalue the Yen long before the Swiss, US, UK or Eurozone did the same.   "[Tokyo's] comments that if necessary it could move rates further into negative territory unsettled the precious metals this morning, says the new Daily Digest from precious metals analyst Jonathan Butler at Japanese conglomerate Mitsubishi, thanks to the Dollar's sharp 2% gain against the Yen helping dent gold and silver prices.   Silver prices today steadied after sinking to 7-year lows at Thursday's benchmarking auction, which found a balance of supply and demand more than 80 cents below prevailing spot silver and Comex futures prices.   Fixing on Friday at $14.08 per ounce, silver lagged gold's strong monthly gain, adding 1.9% and seeing the sharpest 1-month outflows from major exchange-traded fund product the iShares Silver Trust (NYSEArca:SLV) since May 2015.   Gold, in contrast, saw the amount of bullion needed to back shares in the giant SPDR Gold Trust (NYSEArca:GLD) rise by the most since January last year, adding 26 tonnes to reach a 7-week high of 669 tonnes.

meer lezen

'Anti-Arb Compliance' Sinks London Silver 'Fix' 6% to 7-Year Low, Spot Rallies Straight Back

SILVER PRICES sank almost over 80 cents at Thursday lunchtime's London benchmarking, hitting the lowest level in 7 years – while gold prices and Comex silver futures contracts held almost unchanged near multi-month highs – thanks to what some traders called the unintended consequences of regulatory compliance by banks and brokerages.   Modelled on the century-old 'London Fix' which it replaced in 2014 – and which offered a moment of unlimited liquidity to would-be buyers and sellers – the LBMA Silver Price became a formally regulated benchmark under UK law last April.   With spot bullion for London delivery quoted around $14.41 – only 1.1% below yesterday's new 7-week highs – the 12 noon benchmarking auction saw what participants called "heavy selling", with lower suggested prices failing to elicit stronger demand to balance it.   The silver price suggested by exchange group the CME's electronic algorithm was then cut ever lower before suddenly finding enough demand to balance the selling at the lowest price since 30 July 2009.   Dealers blamed Thursday's action on rules – decided by the compliance departments of banks and brokerages, and aimed at meeting the new regulatory regime – which block traders participating in the benchmark auction from "arbitrage" in other silver markets at the same time.   Comex futures were selling 80 cents higher at the final round of today's silver benchmarking auction.   Spot bullion quotes got as low only as $14.15, rising back to $14.40 within 90 minutes.     "[Any]one selling silver down at $13.58 was given an extremely raw deal," says one trading note, "with CME [silver] futures still bid above $14.40.   "As soon as [the benchmark] was done, [futures market] was hit with arbitrage selling and traded down to 14.07 with 5,000 lots trading. Then bounced back to trade $14.30+."   Gold prices meantime edged barely $3 per ounce lower from $1122, a near 3-month high when first reached at the start of this week.   "Jewellery and physical demand is weak," says gold analysis from London clearer, market maker and bullion bank Barclays (LON:BARC) in what – after it last week said it may following Deutsche Bank and Mitsui in quitting the bullion market – it said will be its final note on precious metals.   "Only central bank buying looks to be growing," with China – the world's fastest hoarder of the last 50 years – likely to buy another 200 tonnes in 2016 on Barclays' estimate.   For gold prices, "China's biggest gift over the next year may be the worst case scenario of a hard landing," the note concludes, "which should trigger safe-haven gold demand."   Mainland China's stockmarket fell hard again Thursday, with Japan and Europe also dropping once more.   Commodities held steady after turning higher at the start of this week, and major government bond prices also rose – pushing 10-year US Treasury yields back below 2.0% – after the US Federal Reserve held its key interest rates unchanged as expected on Wednesday.

meer lezen