Gold News

Ahead of Fed, US Inflation Data See Bullion Prices Jump Out of Tightest Range in 7 Years

GOLD BULLION jumped out of its tightest range in 7 years Wednesday in London, rising 1% to $1115 per ounce as new data – released a day before the Federal Reserve's long-awaited September interest-rate vote – said US consumer prices fell last month.
 
That put the headline annual rate of CPI inflation at just 0.2%, way below the Fed's official target of 2.0%.
 
Dollar prices for delivery of wholesale bullion had moved "in a $8.05 range on Monday and Tuesday," says Bloomberg, calling it gold's "smallest [two-day] move in eight years."
 
"Gold continues to trade in a very narrow range ahead of the Fed announcement," agreed a note from the commodities team at ICBC Standard Bank, "though the US inflation figures...appeared to trigger a rally in silver...and lent gold some support too."
 
Silver prices outpaced the gain in gold bullion, rising 3.5% to a 1-week high at $14.85 per ounce "likely exacerbated by stops and short covering," says Standard.
 
"A late and seemingly orchestrated rally in Chinese equities, just before close of play," it adds, "spill[ed] over into the base metals."
 
Copper prices earlier rose 1.2% as Shanghai's stock market – actively supported by the Chinese government since beginning a 35% slump this June – leapt almost 5% in the last hour of business.
 
Now trading just below Friday's 8-week high, copper is set to rise in 2016 according to analysts at US bank Citigroup, thanks to heavy cuts both to production and longer-term exploration and development following the last five years' near halving of prices.
 
On the supply front in gold, mining unions in South Africa – already the world's most expensive major gold producing nation – were split Wednesday over accepting the 14% wage increase offered by world No.3 miner AngloGold Ashanti, world No.7 Harmony Gold, world No.9 Sibanye Gold, and the smaller Evander Gold Mines.
 
The National Union of Mineworkers (NUM) recommended its members accept, but the equally large Association of Mineworkers and Construction Union (Amcu) said it was "very disappointed the offer [was] more or less similar the offer that our members rejected in the early stages of negotiations."
 
Against an 8% annaul drop in the global average cash cost of mining gold in the second quarter of this year – down to $664 per ounce – South African costs actually rose 3% year on year, according to data compiled and analysed by the Metals Focus consultancy.
 
"This came in spite of a 15% weakening of the Rand," Metals Focus noted in a report last month, "as activities were impacted by increased salary costs, electricity tariff hikes and a 6% decline in the average grade of ore processed."

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.

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