Gold News

Wholesale Gold Bar Prices 'Rangebound' at $1800 as Stocks Rise Despite Covid

GOLD BARS rose, fell, rose and fell again in a $20 range Friday, heading for the precious metal's first weekly drop in a month as global stock markets erased last week's drop despite the worsening wave of Covid-19 worldwide.
 
One-in-every-75 people in England currently has the virus, new data said, with Chaand Nagpaul of the British Medical Association calling for an "urgent rethink" of the government's strategy to remove all social restrictions, risking new vaccine-resistant variants.
 
The delayed 2020 Olympics in Tokyo – currently in a state of emergency – began today with protests outside the opening ceremony where no public spectators were allowed into the 70,000-capacity stadium.
 
Retail sales in Singapore have sunk between 30-70% since the pandemic began.
 
Moving through $1800 for the 9th trading day since recovering that level 14 sessions ago, the price in London traded at $1798 per ounce ahead of the LBMA Gold Price at 3pm, the auction of large gold bars which sets the global benchmark price.
 
The price of 400-ounce London Good Delivery bars has ended the week above $1800 per ounce only 42 times before, all but 3 of them since mid-July last year.
 
Chart of gold, weekly finish in US Dollars per ounce, log scale. Source: St.Louis Fed
 
"Very quiet trading across the precious complex in Asia today," says one bullion desk in a note, extending yesterday's "very tight range" after regaining the $1800 level in New York hours.
 
"We expect gold to remain range bound in the coming weeks," says ratings agency Fitch in a separate note. 
 
"However, inflation will remain a key driver of gold prices in the coming months, supporting prices in the near term."
 
With US consumer prices rising at the fastest pace in 3 decades last month, almost half of professional investors believe inflation will rise further over the coming 12 months according to a poll from Swiss bank and London bullion-bar clearing provider UBS.
 
Those investors plan to buy more equities (35%), precious metals (33%) and real estate (32%) to offset that risk.
 
But the No.1 concern among all global investors is now cybersecurity, says the UBS survey, followed by their home country's politics and climate change.
 
"Gold's inability to rally despite ongoing risk-off sentiment highlights that speculative flows remain particularly weak," says brokerage TD Securities.
 
Gold-backed ETF trusts listed in Europe saw small inflows of investor cash on Thursday, but US giant the SPDR Gold Trust (NYSEArca: GLD) ended the day needing no change in the quantity of gold bars held to back its value. Nor did iShares' competitor product (NYSEArca: IAU).
 
Giant silver-backed ETF the iShares Silver Trust (NYSEArca: SLV) meantime saw a small outflow, but it held on track for the first weekly growth in 7, expanding by 0.3% from last Friday.
 
Silver also rallied only to fall back lunchtime in London today, reaching $25.40 per ounce before falling 25 cents but still showing a small gain from last Friday's LBMA benchmarking.
 
The price of wholesale gold bars in Shanghai rose today as the Yuan weakened on the currency market, raising the premium for bullion traded in China – gold's No.1 consumer market – to $4.65 per ounce above comparable quotes in London, heart of the world's physical gold market.
 
That's about half the typical incentive for new imports of gold bars from London seen over the 5 years before 2020's Covid Crisis left China with a glut of supply over demand, pulling Shanghai to a discount as deep as $80 per ounce when global quotes hit their current record of $2075 last August.

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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