Gold News

Dollar-Price Slump Sees Demand to Buy Gold "Pick Up" in Asia, Euro Price Firm as Greece's Eurozone Creditors Reject New Plan

BUY GOLD prices erased most of their 0.7% bounce Monday lunchtime in London from last week's sharp drop to three-month lows, trading back below $1170 per ounce as the US Dollar touched fresh 12-year highs on the FX market.
 
European stockmarkets cut earlier losses, but London's FTSE-100 held 2.3% below last week's new all-time high, set before Friday's strong US jobs data saw world equities tumble as the Dollar rose.
 
Crude oil fell further, but other commodities rallied with gold as US bond yields retreated from Friday's jump to 3-month highs.
 
Silver fell further, dropping to its lowest level since 5th January at $15.74 per ounce.
 
"We are seeing a pickup in physical demand on this dip," says London bullion bank in a note.
 
"However, gold buying is relatively limited, in part because some local currencies are also weaker" such as the Indian Rupee and Turkish Lira.
 
Demand to buy gold from Chinese wholesalers was firm overnight, with Shanghai trading volumes the strongest so far this Lunar New Year as premiums rose to close Monday above $4 per ounce.
 
"Falling bond yields and low opportunity costs in the Eurozone," says new analysis from Japanese conglomerate Mitsubishi, "should [also] continue to make non-yielding precious metal investments attractive."
 
German Bund yields held flat Monday but Italian and Spanish debt rose in price to offer fresh record-low returns to new buyers as the European Central Bank tweeted to say its bond-buying QE program has begun.
 
Greece's creditor nations in the Eurozone currency union meantime rejected the new government's proposals for renegotiating Athens' 2010-2012 bail-outs.
 
"[I want] fewer words and more action from all members of the ministerial council," says Greek prime minister Alexis Tsipras in an interview with German magazine Der Spiegeltaken as a rebuke to his finance minister Yanis Varoufakis giving interviews and continuing to blog and tweet.
 
"The key issue now is not to waste any more time," said Eurogroup chief Jeroen Dijsselbloem, heading in to meet the Eurozone's 19 finance ministers, including Varoufakis, in Brussels today.
 
"If needed," said Varoufakis at the weekend, "if we encounter implacability, we will resort to the Greek people either through elections or a referendum."
 
Looking at Comex gold futures and options, "Speculative positioning has returned to levels seen at the start of the year," adds Barclays' analyst Suki Copper, also noting that exchange-traded fund holdings "have started to turn negative."
 
Net of bearish bets, speculators in US derivatives on both gold and silver were already the least bullish since New Year on Tuesday last week, according to the latest data from regulators.
 
Friday's price drop saw the SPDR Gold Trust (NYSEArca:GLD) shed a further 4.5 tonnes from the gold needed to back its shares.
 
Back down at 756 tonnes, the GLD has now shrunk 2.3% from end-January's peak of demand from fund managers and other professional investors to buy gold price exposure.
 
Silver's largest ETF, in contrast, rose slightly to new 2-month highs, with the iShares Silver Trust (NYSEArca:SLV) now holding 10,181 tonnes.

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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