Gold News

Gold Bullion Rally "Stalls" as US Business Data Jumps, China's New Loans Slow 25%, ETF Holdings Hit 5-Year Low

GOLD BULLION prices slipped to 3-session lows of $1235 per ounce in London on Wednesday morning, extending a drop in China trading and unwinding last week's rise on weak US jobs data.
 
"Good selling on the Shanghai Gold Exchange fix," says a note from Swiss refining and finance group MKS's Asian desk, "pressuring the price about $5 lower.
 
Gold bullion "couldn't seem to recover...not helped by the surging US Dollar."
 
Chinese gold prices fell 0.7% on the day, cutting the premium above London bullion delivery down towards $13 per ounce.
 
Although the People's Bank of China today reported new record foreign exchange reserves of $3.2 trillion as at end-2013, new lending in the domestic economy fell 25% last month from November, separate data showed.
 
"We expect China to still import around 1200 tonnes of gold in 2014," says today's commodity note from Standard Bank, whose global markets business is slated to be bought by existing shareholder ICBC, the biggest bank in China and the world.
 
"[But] lower inflation and tighter credit conditions are worse for gold demand than high inflation and high credit growth."
 
The Reuters news agency today said London bullion market-maker HSBC and Asian dealers ANZ Bank are the first two foreign banks to be granted gold import licenses by the Beijing authorities.
 
New US data Wednesday meantime showed the New York Federal Reserve's "Empire State" index of business conditions jumping to a 20-month high in December, far outpacing analyst forecasts.
 
The US Dollar had already pushed the Euro back 0.7c to a 3-session low at $1.36.
 
Eurozone investors wanting to buy gold bullion today saw the price retreat to €908 per ounce, down 1.1% from Monday's new 1-month highs.
 
"Hawkish comments from Fed officials weigh on gold," Bloomberg quotes Howard Wen at HSBC Securities in the US, after two voting members of the US central bank called for further "tapering" of quantitative easing to follow December's $10 billion cut.
 
"The recent rally looks stalled."
 
Gold bullion stored to back shares in the New York-listed SPDR Gold Trust (NYSE:GLD), the world's largest ETF by market cap when the gold price hit $1900 per ounce in September 2011, fell again yesterday.
 
Dropping below 790 tonnes for the first time in exactly five years, the GLD fell to $31.7 billion by value, down 60% from its peak of 15 months ago.
 
"The market continues in dull trading below this week's highs," says one bank's London trading desk.

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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