Gold News

Gold closes higher in London for the sixth week running

Spot gold prices for physical gold bullion closed higher in London for the sixth week running on Friday.

Gold shot to $684.50 per ounce just as the European session ended, up nearly 2% from the week's low – and 1.5% higher from the previous week's close.

Spot gold prices also rose for the week against all other major currencies – including Sterling, Euros, Yen and the commodity currencies of Canada and Australia.

For British investors, gold ended the week in London above £345.25 per ounce, its highest price since Feb. 26th.

Against the Euro, gold hit €506.50 per ounce at the London close, its high for the week.

Indeed, gold recorded its fourth weekly gain versus the Euro, even as the European currency hit a two-year high against the Dollar and recorded fresh lifetime highs against both the Swiss Franc and Japanese Yen.

(Why does gold keep outperforming all world currencies? Click here for the big picture...)

Friday's big move came on mixed US inflation data and a lower than expected trade deficit for Feb.

On the currency markets, the Euro rose above $1.3500 for the first time since Jan. 2005. Sterling recorded a 3-month spike just shy of $1.9900.

But those moves were still beaten by the price of physical gold bullion.

The US data showed Producer Prices – the prices paid to factories and farms – gaining 1.0% in March. That came on top of a 1.3% rise in Jan., and it was well ahead of Wall Street's consensus expectation of a 0.7% increase.

But the "core" PPI was static last month, according to the Labor Dept., recording a 0.0% change. And the core PPI excludes fuel and food, those mere fripperies of modern life.

The cost of living in the United States isn't rising, in other words, just so long as you don't drive or eat.

"Further policy firming might prove necessary to foster lower inflation," said the US Fed's top officials at their March meeting.

But despite hiking interest rates 17 times from the "emergency" low of 2002-04, the Fed has now watched its own preferred measure of inflation – so-called "core" consumer prices – bounce around the top of its comfort zone for the last 3 years.

"The Labor Department is forecast to report on [Tues] April 17 that its consumer price index rose 0.6% in March after a 0.4% gain in February," noted Bloomberg, "while core inflation held at 0.2%."

Many serious economists have come to view Washington's official inflation data as grossly inaccurate, however. (Click here for more...)

This weekend's G7 meeting of world-leading finance ministers in Washington may also help to push fresh investment Dollars into gold next week.

European politicians are expected to demand higher Japanese interest rates, angry that Tokyo is allowing the Yen to sink in a bid to steal market share from Eurozone manufacturers.

"We think that Japanese growth is without doubt picking up," said Jean-Claude Juncker, EU finance minister, recently. "We think that the exchange rate must reflect the fundamental facts of the Japanese economy.

"Our Japanese friends know that. And we are watching them."

You can get the full story on the EU-Japan battle – and what it means for gold – here...

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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