Gold News

Prices "Grind Higher" as Larger Investors Buy Gold, US Fed Minutes Eyed

BUY GOLD bids in London trade pushed wholesale prices to 1-week highs Wednesday morning, as European stockmarkets fell for the 3rd day running.
 
Asian stocks closed sharply lower, following Wall Street's largest 1-day drop in a month, now down 1.1% from last week's new record high.
 
"We have seen renewed gold buying on the back of stock market weakness," says one London broker in a note.
 
Asian bids to buy gold "[were] seen in bits and pieces in early trade," says refining and finance group MKS, with larger orders following from "private banks, macro accounts and real money [ie, large cash-rich] names."
 
That saw "the metals grinding slowly higher."
 
Today brings the release of minutes from the US Federal Reserve's mid-June meeting, after which gold prices rose nearly 5% in 24 hours.
 
"If the minutes contain any surprises," says Germany's Commerzbank, "this could have an impact on precious metal prices via the Euro/Dollar exchange rate."
 
Prices to buy gold for Euro investors Wednesday touched new 15-week highs above €976 per ounce.
 
UK investors wanting to buy gold saw the price move 0.6% for the week, touching £775 per ounce as the Pound fell further from last week's 6-year highs following a surprise dip in house-price data.
 
"Precious metals firm," says Standard Bank's dealing desk in London. In fact, "all metals firm [despite] Far East buying running into light scale selling."
 
Volumes to buy and sell gold on the Shanghai Gold Exchange grew Wednesday as the Yuan price ticked higher.
 
But versus London quotes, the most active contract extended its discount from $1.40 to more than $2 per ounce.
 
March and April this year saw the longest stretch of Shanghai discounts to buy gold versus London quotes since spring 2009 – suggesting ample supply of metal to the world's now No.1 consumer nation.
 
Looking at US gold futures traders, "We could see the recent [buyers] protect their positions and attempt another leg higher," says Standard Bank. "But as volumes wane [into summer] and people lose interest, would expect a correction lower."
 
Meantime in exchange-traded funds, the large SPDR Gold Trust (NYSEArca:GLD) yesterday added another 2 tonnes to the 798 tonnes of gold bullion already backing its shares, extending its fastest growth since October 2012.
 
Now positive from New Year 2014, the GLD's holdings shrank 40% during 2013 from record levels of 1,350 tonnes.

Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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