GOLD PRICES slipped in London trade Friday, nearing yesterday's 2-week lows after new US data showed a big slowdown in GDP growth but stronger-than-expected household spending.
January still saw gold's biggest Dollar-price rise in almost a year near 7%, plus the biggest Sterling gain since the rebound of July 2013 and the fastest Euro-price rise since January 2009.
Silver meantime held below $17 per ounce, halving January's previous gains this week to 8%.
European stock markets also fell Friday, but stayed on track for their strongest January since 1989 according to Bloomberg data following this month's announcement of Eurozone QE from the European Central Bank.
"Sure enough we have seen gold and silver revert to form," writes David Govett at the London office of brokers Marex Spectron, saying the metals "promised a lot and delivered little.
"For the time being at least, the worst is over. [But] I won’t be holding my breath for a recovery...We will remain in the doldrums."
"Thursday's retreat has been a major disappointment to our recent upbeat view," says analyst Edward Meir at US brokerage INTL FCStone.
Predicting that the US Fed will either delay its first rate hike, or wait a considerable time after before raising again, "We would rather still want to be long at this stage of the game – much as it hurts," Meir says.
Today's US data said GDP growth slowed to 2.6% annually in the fourth quarter of 2014, missing analyst forecasts of 3.3% and with domestic price inflation slowing to 1.1%, just ahead of inflation's four-year low at the end of 2013.
Personal consumption spending between October and December 2014, adjusted for inflation, rose 2.8% annually, matching end-2013's three-year high.
New Eurozone data earlier put the rate of inflation across the 19-nation currency union at minus 0.6% in January from a year before, matching the record low of late 2009.
The Bank of Russia, which bought record quantities of gold for its reserves in 2014 according to the Financial Times today, meantime cut its key interest rate from 17% to 15%, saying that inflation – driven by late 2014's Ruble crash – "will be contained by a decrease in economic activity."
The Ruble spiked lower near 72 per Dollar, but held some 10% above December's new all-time lows.
"With 20/20 hindsight [yesterday's] long liquidation [in gold and silver] was no surprise, especially ahead of end-month/end of week," says a note from Standard Bank's commodity dealers, pointing to this month's Swiss Franc chaos, Greek elections and Eurozone QE.
Investors "now see the world is not over yet." But exchange-traded trust fund shareholders "remain believers in the bull run," Standard adds.
Cash inflows to the giant SPDR Gold Trust (NYSEAcra:GLD) have seen it buy $1.9 billion of gold this month to back newly created shares this month, the largest GLD investment since October 2012.
Gold prices in Shanghai meantime "traded at a discount through most of [Friday]" to London quotes, according to one Asian dealing desk, suggesting weak demand and ample supply in China – the world's second-heaviest gold buying nation.
Over in world No.1 India, "Most investors and buyers of jewellery expect import duty on gold to be cut from 10%" in the forthcoming government budget, unveiled a month from now, reckons Mumbaia refinery Penta Gold's Ketan Shroff, quoted by the Economic Times.
The hike to 10% duty – widely blamed for a surge in gold smuggling to India - came in 2013 as the then-Congress Party government also imposed tight quantity controls to try and reduce the country's current account deficit with the rest of the world.
That rule, known as 80:20, was unexpectedly abolished in November by the BJP government elected under prime minister Narendra Modi.
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GOLD PRICES fell near 2-week lows for US and UK investors on Thursday and slid almost 2% against the Euro as Western stock markets recovered earlier losses following news of deflation in German consumer prices.
Germany's consumer price index has fallen 0.3% from January last year, the Statistisches Bundesamt in Wiesbaden said, the heaviest reading since the two-decade record of 2009.
UK inflation will also turn "slightly negative" said Bank of England governor Mark Carney in a speech overnight.
UK government debt yields fell to new all-time lows on Thursday, dipping below 1.4% per year as bond prices rose, while neighboring Ireland raised 6-month loans from the bond market at 0% rates.
"Falling government bond yields were supporting gold because the opportunity costs decreased," says precious-metals analyst Peter Fertig of QCR in Hainburg, Germany, writing in the new 2015 forecast survey from trade body the London Bullion Market Association.
Fertig was joint runner-up in the 2014 competition for gold price forecasts.
"However, once the ECB has implemented QE, profit-taking will probably set in," Fertig now says, forecasting 4% lower gold prices on average in 2015 at $1216 per ounce.
Greek bond yields also fell sharply on Thursday, with debt prices rallying as shares in the country's major banks bounced from yesterday's plunge of up to 30%.
That knocked almost 2 percentage points off Athens' 10-year yields, taking them back down to 8.2% – the level before last Sunday's election victory for Syriza, which wants to write off some of Greece's €300 billion loans from the "troika" of Eurozone partner states, the European Central Bank, and the International Monetary Fund.
"Haircutting IMF loans would inflict losses on many countries far poorer than Greece," writes Reuters BreakingViews columnist Hugo Dixon in a letter to the Financial Times. "If the ECB accepted a haircut on its bonds, it would probably breach EU law."
But "haircutting the Eurozone loans won't provide much debt relief in the short term," says Dixon, noting that those loans to Greece don't need any repayment until 2022 and are charged at just 1% annual interest anyway.
"If Greece's creditors capitulate," says ex-UBS and now independent economist George Magnus in the UK's Prospect magazine, "the floodgates will open for similar treatment elsewhere, causing huge anguish and discomfort in northern Europe.
"[But] if Greece backs down in the face of stern creditor resistance, the feeling of mistrust between north and south will become more corrosive and politically explosive."
"Increasing geopolitical tensions, subdued growth, uncertainties in the Eurozone and possible greater stimulus will prevail in 2015," says 2014 LBMA gold price forecast winner Frederic Panizzutti, head of Swiss refiner MKS Pamp's Dubai operations.
Also writing in the new 2015 survey, and a four-times winner across gold, silver, platinum and palladium forecasts, Panizutti now predicts a 2.1% rise in gold's Dollar average to $1292 this year.
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GOLD PRICES moved in a $10 range ahead of the US Federal Reserve's new policy statement Wednesday, slipping as Wall Street stock markets opened higher following news of the largest quarterly corporate profits in history from Apple (Nasdaq:AAPL).
Dollar gold prices had earlier touched $1293 per ounce, just shy of last week's closing level, as commodities and government bonds ticked lower.
Gold priced in Euros moved in a tighter 0.8% range, heading sideways for the third session running around €1135 per ounce, as the single currency slipped in advance of the Fed announcement.
Athens stock market today dropped over 9%, and Greek 10-year bond yields rose near 10% per year, as the new Syriza-led coalition government held its first cabinet meeting.
"Our priority is a new renegotiation with our partners," said Greece's new prime minister, Alexis Tsipras, at today's meeting. "We will not default."
Yesterday saw another heavy inflow into the largest exchange-traded gold fund, the SPDR Gold Trust (NYSEArca:GLD), adding almost 10 tonnes to the gold needed to back its shares as the broader stockmarket fell.
That took the GLD's total holdings above 752 tonnes – up by 6.7% since early January's new 6-year low for the fastest 3-week gain since June 2010.
US crude oil meantime lost 2% and natural gas prices fell 3% Wednesday as Winter Storm Juno moved off the north-eastern United States having failed to hit as hard as forecast.
"Wednesday should bring us a choppy session," reckoned a note overnight from US brokers INTL FCStone, forecasting that the Fed policy statement will "likely pay greater attention to the slowing global macro picture...reinforce its 'go-slow' approach on interest rates...[and] weaken the Dollar, providing gold with support."
"Since the Fed last met on Dec 14th," notes the London trading desk of Standard Bank, "we've seen monetary easing from ECB, Bank of Canada, Swiss National Bank, Danish Nationalbank, Turkey and India.
"Something's clearly going on as the timing of these actions is unexpected."
Wednesday saw the Monetary Authority of Singapore surprise the market by saying it will "reduce the slope" of appreciation in its Dollar against other currencies in 2015, citing falling inflation and the need for "medium-term price stability".
The Singapore Dollar fell 1% against the USD, hitting its lowest level since July 2010.
Gold price action in Asian trade "was muted," says refiner MKS's dealing desk, "with participants happy to sit on the sidelines" ahead of the US Fed announcement, due at 14:00 ET.
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GOLD PRICES rallied fast against the Dollar on Tuesday afternoon in London, recovering from 1-week lows as New York's stock markets dropped 1.7% following a shock decline in durable US goods orders reported for December.
Last year's flat Dollar gold prices, separate data showed Tuesday, came as China's gold imports through Hong Kong fell 30% from 2013.
The Dutch National Bank meantime denied it bought any gold in December after a "fat finger" error on the International Monetary Fund's database led Reuters and other news outlets to say the Netherlands had expanded the world's 10th largest state holdings.
"Comex option expiry tonight," notes Swiss refining and finance group MKS of US gold derivatives, "with a million ounces of open interest around $1300, and large open interest at $1250."
With February Comex options now being closed, well over 80% of the five most popular options on March gold futures are bullish calls – betting on prices rising – according to Reuters data.
"Gold confirmed an inverted head and shoulders pattern," says technical analysis from French bank and London market maker Societe Generale, pointing to a bullish chart pattern with "potential" to reach $1342 per ounce.
That level would be just shy of the Dollar gold price's 12-month peak of July 2014.
Rounding up the Netherlands' 19.619 million-ounce holdings to 20.0moz, the IMF's data showed an additional 9.1 tonnes in the DNB's reserves for last month
No Western European state has bought gold bullion since the late 1980s. Eurozone central-bank holdings have shrunk 15% to 10,785 tonnes since the turn of the century.
"It is time to speak the truth," says Texas University economics professor and author Yanis Varoufakis – now set to become finance minister in the new Syriza-led Greek government – "about the unsustainability of the major denial with which Europe treated a bankruptcy in its midst and an architectural problem of the Eurosystem."
Winning one-third of the popular vote and half the seats in Sunday's snap Greek elections, Syriza is pushing for debt write-downs and a restructuring of its IMF, Eurozone and ECB bail-outs starting 2010.
The largest single chunk of Greece's outstanding €323 billion in debt is owed to German banks, analysis published in The Times says today.
"There's nothing wrong with fiscal austerity," says Standard Bank FX strategist Steven Barrow in London, "but when Germany refuses to fiscally expand and so maintains very low inflation rates of its own, others are almost forced to run with negative inflation [ie, domestic deflation] to avoid competitive loss.
"Does QE from the ECB help solve any of this? No it does not."
"The ECB's quantitative easing is too little, too late," agrees The Banker magazine today.
Some 16% higher for 2015 to date, Euro gold prices held flat on Tuesday as the single currency extended its bounce from Monday's new 11-year lows to nearly 3 cents, touching $1.1390.
London and Eurozone stock markets turned lower, but longer-term US Treasury bonds rose in price after the poor US data – driving 30-year yields down to near-record lows at 2.33% per year.
Germany's chief finance regulator at BaFin, Raimund Röseler, meantime said his staff had found "no evidence of manipulation" in gold price benchmarks following an investigation of former London Gold Fix member Deutsche Bank.
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Greek debt will not be renegotiated just because Syriza won. So it will default, in the end, because Greece cannot pay...
SO GREECE is apparently "set on collision course" with its Euro partners after Sunday's "comprehensive victory" by Syriza...the "radical, far-left party", says Adrian Ash at BullionVault, cutting and pasting from Monday's press coverage.
Just for the record, Greece has been "colliding" with Germany, France and the rest since 2010. Syriza won only 149 out of 300 seats in parliament, and it only gained 36% of total votes. It must lead a coalition to take power.
As for "far left", Syriza looks more "socialist" than "Maoist" to me. You can spot that because the word "naive" would also fit very well.
Still, calling Syriza "radical" today...just for wanting to free a little of Greece's future from the debt bubble of a decade ago...shows how much power creditors hold.
Those creditors will lose in the end. You can be sure of that.
But for Greece today...as for most everywhere else...a Biblical debt jubilee looks a long way off. I fear there's a lot more pain, arguing and strife to get through yet.
Syriza is also guilty of hype this morning, of course. "Your mandate," party leader Alexis Tsipras told supporters, "is undoubtedly cancelling the bailouts of austerity and destruction."
Really, a mandate? With barely one Greek vote in every three?
Outside Greece, the Eurozone's political leaders don't think Tsipras won a mandate for change either. Its political leaders told him as much last night when they called to congratulate.
Greece's other big lender, the IMF in Washington, also agrees...unwittingly (and correctly) forecasting a mass cancellation of debt sometime in the future by saying it "rules out special treatment for Greece."
Meantime, financial markets also think nothing has changed. Gold and silver are lower today as the Euro rallies from new 11-year lows. Germany's stock market is hitting new all-time highs. London's FTSE100 just enjoyed its best week since 2011.
Yes, Greek bond yields are higher as bond prices fall. But only by 0.4 percentage points, and way below the record levels of 2012.
"Relax," says a fund manager with asset-management giant Blackrock. "There's nothing to fear from Greece."
We agree. Do not fear Greece...and do not fear its coming debt default. Fear instead the Eurozone and IMF delays, risking more anger and violence as they delay the inevitable. Because when debtors can't pay...or their children and grandchildren refuse to...then the creditor must.
Short term there's a little profit-taking in gold and silver derivatives this morning. After all, net speculative betting on gold had jumped last week to sudden two-year highs. BullionVault users, overall, are small net sellers of vaulted metal so far today as well. But further ahead, physical bullion owned outright will remain...as always...the only tradable asset class which cannot go bust.
Contrast that with bonds, bank deposits, derivatives contracts or any other investment requiring someone else to stay solvent for its value.
Yes, gold and silver pay no interest. But that is an inevitable consequence of lacking debt-default risk...a risk which a small but growing number of people are choosing to insure against by holding at least some of their savings in physical bullion.
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GOLD INVESTMENT prices rallied in London Monday lunchtime, steadying from a steep drop as world stock markets held flat overall and government bond prices slipped following the victory of anti-austerity party Syriza in Greece's snap general election.
The Euro currency recovered almost 2 cents from new 11-year lows against the Dollar on the FX market.
Earlier hitting new 21-month highs at the start of the week's trading in Asia, wholesale prices for gold investment bars retreated 2.4% versus the Euro.
"Over the previous week we witnessed significant physical buying interest by German retail investors," says German gold refining group Heraeus in a note.
"Investors in Germany, France and Italy [had] been buying gold ahead of the European Central Bank meeting," says the Wall Street Journal, pointing to the ECB's launch of €1.2 trillion in QE bond purchases on Thursday.
"Physically backed gold ETPs," says Barclays Capital, looking at exchange-traded investment trusts giving exposure to gold prices, "saw their largest daily inflow since January 2013 on Friday...[putting] inflows on track to deliver the largest monthly inflow since September 2012" by weight.
"This corresponds," says the dealing desk at Standard Bank in London, "to the dramatic increase in net speculative length" in US derivatives contracts, "back to the highs seen in October 2012 [before the] massive liquidation of 2013."
Positioning data for US futures and options released Friday show the notional value of speculators' bullish minus bearish bets on gold leaping to 586 tonnes last week, up by 27% from the week before to the largest level since the US Federal Reserve began its last round of quantitative easing more than two years ago.
Overall, the total number of Comex gold futures and options contracts now open jumped 15.3% – the fastest growth since April 2013 marked the start of gold's worst price drop in three decades – in the week-ending last Tuesday, which saw huge volatility in world markets after the Swiss National Bank suddenly abandoned its 3-year old "peg" for the Franc to the Euro.
"Gold is increasingly being used as a Euro hedge in the short term," note analysts at US investment bank Citi.
"Persistent uncertainty out of the Eurozone," adds Swiss bank and London bullion market maker UBS, "is likely going to keep any journey south [in gold prices] relatively contained.
"While long liquidation is a risk, the potential for shorts to aggressively build positions [betting against gold using futures and options] is limited for now."
Today in China – one of the world's top two gold-consumer nations with India – the Yuan price of gold investment bars ended the day unchanged from Friday.
But with the US Dollar rising to a new 8-month high against the Chinese currency, Shanghai premiums for gold bars – over and above the global benchmark of delivery in London – fell to just a few cents per ounce, potentially deterring importers ahead of next month's key Lunar New Year celebrations.
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GOLD PRICES fell hard from new multi-month highs Friday afternoon in London, dropping as the Euro currency rallied from new 11-year lows following yesterday's news of €1.2 trillion of QE bond purchases by the European Central Bank.
With new data showing weaker than forecast US home sales and manufacturing activity in December, gold's drop cut this week's Dollar gains to 0.6% after failing to re-take $1300 per ounce.
Gold priced in Euros sank more than 2% from new 21-month highs near €1170 per ounce.
Eurozone stock markets extended their rise, with Frankfurt's Dax hitting new all-time highs.
German 10-year Bund prices meantime rose so high, the annual yield offered to new buyers fell to 0.38%.
Yields on 10-year Swiss government bonds fell further into negative territory, costing new buyers 0.25% of their capital per year.
"QE's mission has already been accomplished in the bond market," says US economist and investment strategist Ed Yardeni.
Despite the plunging currency, "It's not obvious that QE will revive inflation in the Eurozone," Yardeni goes on. "It didn't do so in the US. [Also see] Japan’s recent disappointing experience."
"The Euro's dramatic slump," says a note from the commodities team at Commerzbank in Frankfurt, "is continuing to drive up the gold price in Euros."
But Thursday's action, it adds, also "proved gold is well able to hold its own despite the massive appreciation of the US Dollar, even rising to a five-month high of $1310."
Yesterday's daily close in Comex gold futures contracts was "above the crucial 1300 level," says a technical analysis from bullion market-maker Scotia Mocatta's New York office, "provid[ing] further confirmation of the recent rally.
"The focus now turns to 1320...Support is expected at 1275."
Data from Reuters said Friday that bullish calls, giving traders the right to buy gold cheaper if prices rise, now account for well over 80% of all Comex gold options on February and March contracts.
Exchange-traded gold trusts – a major vehicle for mutual funds and money managers to gain exposure to gold at cash prices, without leverage – meantime swelled again yesterday.
European gold ETFs added another 3 tonnes, while the giant US-listed SPDR Gold Trust (NYSEArca:GLD) held flat at 740 tonnes altogether.
"Surprisingly quiet market," says London bullion dealers Standard Bank – now a division of China's ICBC.
"Physical demand [from Asia] non-existent. Seeing largely selling interest still with discounts widening."
Discounts to world prices in India – the world's No.1 consumer nation – widened again to fresh 17-month records on Friday at $15 per ounce, as weak demand met large stockpiles built by retailers before the start of the year.
Easier import rules saw a surge in gold inflows to India in November and December. But now, with the Hindu wedding season about to recommence, imports so far in January may have fallen 50% or more, the Business Standard quotes "a person working closely with gold importing agencies.
"Discounts also make smuggling less attractive."
Over in China – the world's No.1 consumer nation in 2013 – Shanghai gold prices pushed higher in Yuan terms on Friday.
But their premium over Dollar-equivalent London quotes fell to $0.75 per ounce, down from $3.65 at the start of this week and offering an incentive to importers less than one-fourth the last 3 months' average.
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EURO GOLD prices jumped to 21-month highs on Thursday, leaping above €1130 per ounce as the single currency sank on the FX market following the announcement of QE government-bond purchases by the European Central Bank.
ECB president Mario Draghi said this buying – plus the asset-backed securities purchases first announced in September and begun in October – means "combined monthly purchases of public and private sector securities will amount to €60 billion until end-September 2016.
"[They] will in any case be conducted until we see a sustained adjustment in the path of inflation...below, but close to, 2% over the medium term."
That €60bn sum beats the €50bn figure leaked by unnamed ECB staff on Wednesday.
Although the ECB will target only government bonds rated to be "investment grade", thereby excluding those from Greece – where the anti-austerity Syriza party, which wants to cancel some debt or quit the Eurozone, is likely to take power after next Sunday's election – Draghi said that "additional eligibility criteria will be applied" for countries currently subject to EU/IMF support.
Euro gold prices added 2.0% inside 30 minutes, while the single currency sank below $1.15 to the Dollar, but failed to break below last week's new 9-year low.
Gold priced in Dollars meantime touched $1300 per ounce, a 5-month high when first reached Wednesday morning, before edging back.
Eurozone stock markets also rose, erasing earlier losses, as weaker Eurozone government bond prices pushed higher, taking 10-year yields Italian down to record lows of 1.63%.
Intended to help add €1 trillion of investments to the ECB's balancesheet, the ABS program launched in 2014 has to date spent only €2.1 billion, Bloomberg noted this week.
Today's ECB press release kept interest rates unchanged – meaning a negative 0.20% per year on reserve deposits – and said "further monetary policy measures [would] be communicated by the President" at his press conference, scheduled for 45 minutes later.
In his speech – delayed by 10 minues, apparently by elevator trouble in the ECB's new €1.4bn headquarters, planned in 1999, begun in 2011, and occupied for the first time in November – Mario Draghi began by referring to the full details, which would be posted on the ECB's website another hour later.
The text of Draghi's opening remarks wasn't posted to the internet until 14:51 CET, more than 20 minutes behind schedule.
"The overall amount and the monthly flows [of new ECB QE] are quite meaningful," Draghi said in the question and answer session following his statement.
Euro gold prices have twice peaked near €1380 per ounce, first in September 2011 and again 12 months later as weaker Eurozone government bond yields soared on fears the currency zone would break up amid debt defaults by weaker member states Portugal, Ireland, Greece, Spain and perhaps even Italy, the union's third largest economy.
Gold priced in the Euro turned lower in September 2012 on the day Mario Draghi vowed to do "whatever it takes" to maintain the union, widely taken to mean QE bond-buying was an option.
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Turkey is a microcosm of the global gold market – a country which is home to the entire gold value chain from mining and refining, to jewellery design and investment. Its long tradition of gold demand, underpinned by a deep cultural heritage, strong fabrication capacity and a substantial coin market has resulted in households accumulating an estimated 3,500 tonnes (t) (US$145.3bn) of gold...
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