GOLD BULLION traded in London fell to 11-week lows beneath $1270 per ounce Tuesday morning, losing $20 per ounce for the week so far as the US Dollar rose sharply and world stock markets also gained.
Ahead of Wall Street's return from the Labor Day weekend, gold bullion stood 1.4% below last Friday's finish in Dollar terms.
The US currency meantime hit a new 12-month high against the Euro, widely expected to see some form of quantitative easing "money printing" in Thursday's European Central Bank decision.
Euro prices for gold bullion fell Tuesday to 1-week lows near €965 per ounce, some 3.5% below their 2014 high to date.
The Dollar also hit a 7-month high against the Japanese Yen, and a 1-week high against the Chinese Yuan.
Shanghai's most active gold bullion contract fell 0.8% towards 3-month lows in the Yuan.
In Dollar terms, prices on the Shanghai Gold Exchange cut their premium to London quotes from last week's $2 per ounce to just 60¢ at Tuesday's close.
"This week central bank meetings will be a key focus," says a trading note from MKS, the silver and gold bullion refining group, in Geneva.
"Expectations are mixed ranging from the ECB doing nothing through to...'pre- announc[ing]' purchases of asset-backed securities.
"[Friday's] non-farm US payroll data should apply more pressure to gold and silver prices."
Silver prices today matched London's sharp drop in gold bullion, losing 1.5% to hit the lowest level since mid-June at $19.18 per ounce.
Monday's weak PMI reading of Eurozone manufacturing activity was followed this morning by confirmation that Eurozone factory-gate prices fell 1.1% in July from the same month last year.
Trying to avoid consumer-price deflation by devaluing the Euro, "The best thing the ECB could do right now is to buy US Treasuries in large size and on a non-sterilised basis," says Standard Bank FX strategist Steven Barrow in his daily note.
"The ECB might not be popular for joining the 'currency war' but...others should appreciate it's better to have a healthier Eurozone economy, with higher inflation, than the sort of mess we have at the moment."
Priced in the Euro, gold bullion has now dropped 30% after returning to September 2011's record peak of €1375 per ounce a year later.
ECB president Mario Draghi then vowed to "do whatever it takes" to preserve the currency union, unveiling a series of bank lending and bond-buying programs likely to be widened and extended at Thursday's meeting.
"I don't think the ECB has the instruments to tackle deflation to be frank," Bloomberg News last week quoted German finance minister Wolfgang Schauble.
"Monetary policy can only buy time. [The ECB] has come to the end of its instruments."
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GOLD PRICES moved in a $5 range Monday morning below $1290 per ounce, extending the metal's tightest trading pattern in 5 years as European stock markets also held flat ahead of a busy week for data and central-bank decisions.
New York remained shut for the Labor Day holiday.
Ukrainian troops meantime pulled back after failing to take Luhansk Airport from pro-Russian separatists.
Russian president Vladimir Putin yesterday urged talks about the "statehood status" of southeastern Ukraine.
"Sanctions can have an impact for German companies," German chancellor Angela Merkel today told a press conference in Berlin.
"But accepting Russia's behaviour is not an option."
The Euro currency today touched new 5-year lows beneath $1.3125 – helping gold prices in Euro terms rise near Thursday's 2-week highs above €980 per ounce.
Eurozone government bond prices also rose – pushing the yield offered to new buyers down to fresh record lows beneath 0.9% per annum on German 10-year debt – following weaker than expected manufacturing data on the Markit Purchasing Managers Index (PMI) across the 18-state currency union.
Thursday's meeting of the European Central Bank is widely expected to see some move to ease monetary policy still further.
"This could be a mixed blessing" for precious metals, says Jonathan Butler at Japanese conglomerate Mitsubishi, "as a weakening Dollar price of gold is offset by possible safe-haven buying."
"Looser Eurozone monetary policy will not...necessarily lead to higher gold and silver prices," agrees Robin Bhar at French bank and bullion market-maker Societe Generale.
Looser monetary policy would boost "the urge for a hedge against inflation", but would "likely occur because of very weak inflation (or even deflation)," says Bhar. It will also see a stronger US Dollar – "naturally a bearish factor" for gold prices.
Moving only $40 per ounce on the London PM Fix in August, gold prices last month recorded their tightest range since September 2009.
August saw the giant SPDR Gold Trust – the world's largest exchange-traded fund at its peaks in 2011 and 2012 – reverse July's small gold bullion inflows to stand almost unchanged from the end of 2013, then a 5-year low, at 795 tonnes.
Open interest in US gold futures and options last week fell to new 5-year lows, data showed late Friday, as speculators and commercial players both cut the number of contracts they held.
"[Investment] flows so far this year have been rather unexciting," says a gold supply and demand note from Japanese trading house Mitsui's analyst David Jollie.
"If investment flows remain muted, a relatively static price performance might be expected."
Gold prices in China – the world's No.1 consumer nation – also held flat in Yuan terms on Monday, with Shanghai contracts holding a $2 per ounce premium to equivalent London quotes, after new PMI data showed the country's manufacturing growth falling near zero in August.
"The government may unveil some big infrastructure projects if the economy slumps further," reckons investment strategist Wang Weijun at Zheshang Securities in Shanghai.
"The economy still faces considerable downside risks," agrees HSBC economist Qu Hongbin. "[This] warrants further policy easing."
"If we now start to see a serious challenge to growth, the pressure to do more will intensify," says RBS economist Louis Kuijs.
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Fancy playing gold's historical odds this fall...?
WE DON'T make price forecasts here at BullionVault, writes Adrian Ash, head of research at the world's leading gold and silver exchange online.
If we knew where prices were heading by a certain date, we'd be in another business entirely...ruling the world most likely from a black basalt tower shrouded in thunder and lightning.
Or at least cleaning the office with an army of enchanted mops.
History can help point the way however. And as lots of coin-dealers and pundits will tell you today, the month of September historically sees the best average gain in gold prices.
"Gold has its best month of the year in September," as UK bank and London market-maker Barclays put it in a note today, "as investors shy away from riskier assets such as equities."
Whatever the reason (India's Diwali demand? the end of gold's typical summer lull as Western traders return from the beach?) the simple averages bear this out. Since prices began floating in 1968, buying gold has returned 2.3% in September (US Dollar prices) on average, gross of costs. That's well ahead of the average 0.7% from the other months of the year.
More than that, according to BullionVault's own number-crunching today, September has been the best single month in 9 of the last 46 years. That beats March, May and July (5 each) as well as February (six).
But most important for active investors, perhaps, is looking beyond one month's date. Because the last third of the year...from September to New Year's Eve...has offered the best time to buy and then sell gold since 1968.
The last four months of the year, which 2014 will enter on Monday, has returned an average 5.1% to Dollar-gold traders. That beats the earlier two thirds both on the average return (Jan-April 3.1%, and May-Aug 2.5%) and also on frequency (best gain 17 times versus 14 and 15).
These are just historical gold data, remember. There's no guarantee 2014 will play out like the "average" year. But if you fancy playing the odds, take note. Gold currently stands 7.3% higher in Dollar terms so far in 2014. It has matched or beaten that year-to-date gain 19 times since 1968.
In those 19 years, gold only fell to end the year lower 4 times. And where gold ended August within 1 percentage point of its current year-to-date rise (6 times in total), it only fell once by New Year.
The average rise by year-end has been 8.9%.
These are just numbers, of course. And if you see active trading like playing roulette, then the wheel...like a pair of dice...has no memory. Choosing to buy gold because the historical averages suggest it, however, may just become self-fulfilling.
Imagine if everyone reading coin-dealer blogs, pundit columns and Barclays' note today decided to act.
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BUY GOLD bids in London trade fell Friday morning, cutting the metal's August gain to just 0.3% as world stock markets stalled after Wall Street failed to make new highs yesterday.
Bond prices rose once again after weaker-than-forecast Eurozone inflation data.
Kiev's parliament today moved to join Nato – which said Moscow had "violated" Ukraine's sovereignty – as Russian president Putin likened Ukrainian attempts to retake the separatist city of Donetsk to the Nazi siege of Leningrad in 1942.
Trading at $1286 per ounce ahead of the long US Labor Day weekend, prices to buy gold peaked at a 1-month high of $1322 in the second week of August.
Silver prices today steadied above $19.50 per ounce, up 0.6% from last Friday but down over 4% from the end of July.
"In view of the further escalation of the Ukraine-Russia conflict," reckons a note from Germany's Commerzbank, "precious metals were in demand as safe havens yesterday."
But "safe-haven demand for gold," counters Australia's ANZ Bank, "is proving short-lived."
"[Thursday] just confirmed that gold and silver are going nowhere for the time being," agrees David Govett at brokers Marex Spectron in London.
"If you have the appetite for it, you can day trade the ranges for the foreseeable future."
The "safe-haven move", Reuters quotes refining-group Heraeus' trader Alexander Zumpfe, is currently being "outweighed by market expectation of higher US interest rates."
"You clearly see Dollar strength in the gold price," says Swiss bank UBS's wealth management CIO Dominic Schnider, speaking to CNBC.
"In Euro terms the gold price is pretty much flat, so most of the [last 3 weeks'] downturn is being driven by the stronger Dollar."
Looking at 24-hour trading patterns, "Gold has managed three days of higher closes," adds Canadian bank and London market-maker Scotia Mocatta in its daily note, but "the North American time segment shows that bearish candle sticks (close lower then opening).
"This basically states that overall gold is moving higher, but it is Asia/London doing all the buying, with North America a steady seller."
Over in Asia on Friday, Shanghai gold contracts held near $2 per ounce above London prices, taking August's full-month average to the strongest – and first positive – premium to the world's benchmark quotes since May.
Hong Kong premiums were lower however at 80 cents per ounce, with Tokyo prices to buy gold in line with London quotes.
"It's the summer season and it's normally very quiet," a Japanese dealer told Reuters earlier.
"I can't see any [gold] buying or selling at the moment."
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GOLD PRICES rose 0.8% in Asian and London morning trade Thursday, reaching a 1-week high of $1295 per ounce as Kiev, Washington and Western news agencies said Russian troops were fighting with pro-separatists in eastern Ukraine.
Calling for an emergency meeting of the European Union states, Ukrainian president Poroshenko withdrew earlier comments that this marked a Russian "invasion".
Moscow denied its troops had crossed the border. Separatists took the town of Novoazovsk, near the Black Sea port of Mariupol.
Silver moved higher with gold prices, but squeezed their 1.8% gain into just 90 minutes after the start of London trade, hitting a 2-week high at $19.88 per ounce.
Eurozone stock markets fell, with Germany's DAX losing 1.4%.
Government bond prices rose across the board, pushing Eurozone yields down to new record lows after Germany reported 0% consumer-price inflation for August from July.
"Geopolitical headwinds [have] helped increase haven demand for gold," Bloomberg quotes a Beijing analyst
The giant SPDR Gold Trust (NYSEArca:GLD) ended Wednesday with its bullion backing unchanged at 795 tonnes, some 1% below the level of 1st March, when the Moscow parliament first approved President Putin's request to use force if necessary to "protect Russia's interests."
With gold price fundamentals neutral, says French bank and London market-maker Societe Generale, bearish factors led by improved US data weigh against bullishness from the Sunni insurgency and US air strikes in Iraq, and "ongoing Ukraine/Russia tensions."
"Our fundamental view has not changed," adds a note from Canada's TD Securities, remaining bearish but raising the bank's end-2014 forecast for gold prices to $1265 per ounce "to reflect recent positive price action caused by Middle East and Russia tensions" as well as "mixed" US data.
The Dollar today failed to beat this week's new 2014 highs against the Euro, despite a sharp upgrade to Q2 GDP growth, revised up from 3.9% to 4.2% annualized.
Q2 price inflation was revised up from 2.0% annually to 2.2%, the fastest pace since end-2012.
Last week saw a drop in new US jobless claims, separate data but continuing claims for unemployment benefits came in above analysts' consensus forecasts.
"Although plagued with a sense of under-performance," says one Asian trading desk, the gold price "continues to do the minimum necessary" to stay above what it calls the "key" level of $1275.
"Topside $1295 remains important."
With the US Labor holiday on Monday, said Swiss refining and finance group MKS in a note earlier Thursday, gold price "ranges are likely to remain narrow and interest sparse."
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Amagi Metals has been accepting cryptocurrencies since November of 2012 with a major focus on Bitcoin. Bitcoin now accounts for over 40% of the companyâ€™s customer payments
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GOLD PRICES held onto a rally in Asian trade Tuesday lunchtime in London, rising to the highest level since Thursday near $1290 per ounce.
Silver tracked and extended the rally in gold prices, recovering almost all of last Tuesday's 1.5% drop to touch $19.69 per ounce.
World stock markets also rose, with New York's S&P 500 index set to open just shy of a new record at 2,000 points.
Gold prices for Euro investors meantime held above €975 per ounce – within 3% of this year's highest level – as the single currency finally steadied below $1.32, a new 11-month low to the Dollar.
Stressing that Eurozone rules prevented its 18 member states from "backloading" fiscal reform in the same way the US and Japan have, European Central Bank president Mario Draghi vowed on Friday to "use all the available instruments" to avoid deflation in consumer prices.
The ECB meets next week to set rates and further outline its bank lending programs.
Apparently speaking to German concerns over quantitative easing and other "extraordinary" measures, "All countries should have an interest in achieving...cohesion" Draghi added.
"Dollar very strong," says one bullion bank in a note. "Hard to see precious metals sustain rally in this environment."
The gold price, agrees Germany's Commerzbank, "is still facing headwinds from the firm US Dollar," adding that Tuesday's rally "presumably [comes] on the back of the many sources of geopolitical crisis."
Moscow and Kiev spokesmen today traded differing stories over the capture of 10 Russian paratroopers inside Ukraine.
Russian president Putin today shook hands at a meeting in Minsk with Ukrainian leader Poroshenko – who Monday called snap elections for next month.
Moscow yesterday reported a fourth monthly rise in its official gold bullion holdings, adding over 10 tonnes to reach 1,104 tonnes.
Rising to the highest level in at least two decades, Russia's gold hoard now outweighs the official reserves of China – widely seen as under-reported by Beijing in a bid to deflect market attention from continued accumulation by the world's largest holder of foreign exchange reserves.
Gold imports to China through Hong Kong fell last month to 21 tonnes, the lowest level since mid-2011, new data showed Tuesday.
Year to date, Chinese gold imports through Hong Kong now stand 25% below 2013's record levels, and while the newly opened route via Shanghai's free-trade zone means the Hong Kong data may "no longer paint a full picture of Chinese gold imports," notes Commerzbank, recent forecasts of 1,000 tonnes for full-year 2014 from market development group the World Gold Council "may prove to be overly optimistic."
The Shanghai free-trade zone has already beaten its target membership for a new Yuan-denominated, international gold exchange to be launched this fall.
"It is too important a market to stay away," Reuters quotes Swiss refiner Argor-Heraeus director Bernhard Schnellmann, which is apparently thinking of joining.
Gold prices on the domestic Shanghai Gold Exchange closed Tuesday higher more than $3 per ounce above comparable London quotes – near the highest Shanghai gold premium of 2014 to date.
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Florian Siegfried said mid-cycle corrections in gold tend to last up to four years. It has been more than three years now, probably 3.5 for the miners.
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(Correction: Two 26-carat batches in circulation, not two 2-carat batches as previously stated)
By Alex Létourneau Kitco NewsTuesday August 12, 2014 11:50 AM
(Kitco News) - After finding a way to turn diamonds into an affordable investment option, InvestDiamond.com has seen a growing interest in Europe as the company looks to expand to North America.
Using a specific criteria for the diamonds included in their batches, InvestDiamond has managed to bypass the main issue with diamonds being turned into an investment product –which is no two diamonds are alike and therefore impossible to attribute a fixed price to a cluster of diamonds.
InvestDiamond’s physically-backed batches of similar stones are then fractioned as members place bids for as little as $15 or €11, while prices are based on real-time orders on the site and the Rapaport price.
The diamonds are kept in Swiss vaults in the Freeport zone, outside of the banking system.
Launched Nov. 30, InvestDiamond has “two 26-carat batches that are in circulation and we’re working on getting the third one ready,” said Linnea Bruce, project manager at InvestDiamond.
Based in France, InvestDiamond has been testing the waters locally before expanding its reach to other parts of the world, with the U.S. as its next main target.
“Our members are mostly in Europe – we wanted to get some feedback and stability in Europe first before we transitioned to the U.S. market,” Bruce said.
One way they’re looking into capturing the attention of the U.S. market is by introducing a physically backed gold, silver and investment diamond debit card.
InvestDiamond’s parent company, AuCOFFRE.com, already has a physically backed gold debit card, called the Vera Carte, that it has put into circulation and used in France over the last few years.
The success of the card has led InvestDiamond to add silver and diamonds to the card as they are currently in the beta testing phase.
“By year-end it should be out of beta testing and available to the general public,” Bruce said. “You can credit your account with $1,000 and have 60% backed with gold, 20% with silver and 20% with diamonds, for example.”
Bruce said it can used as a regular debit card. It’s accompanied with a pin for usage and is recognized by Master Card.
She also added that they hired a new card distributor, allowing the debit cards to be available for usage worldwide.
“Once we get that launched in France, we’ll be looking for a partner with experience in that concept to bring it over to North America,” Bruce said.
The current outlook for supply and demand metrics in the diamond space has experts pointing to diminishing supply, with a lack of new discoveries and older operations reaching the end of their mine life.
On the other hand, demand is expected to continually expand as the middle classes in China and India are expected to grow rapidly over the next decade.
Physically Backed Diamond Investment Site Picking Up Steam In Europe, Eyeing U.S. Market was first posted on August 19, 2014 at 3:49 pm.
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