Gold News

Gold Bullion Slips for 3rd Week, Chinese Premiums 'Disappointing' Before New Year, Greek Deal 'Risks Drop to Test $1200'

GOLD BULLION prices rallied to $1230 per ounce Friday lunchtime in London but headed for their 3rd weekly drop in a row as Chinese trading fell back ahead of next week's Lunar New Year holidays and new data showed Germany's economy growing better than expected.
 
Silver in contrast jumped 2.4% to trade near its highest Friday close in two weeks.
 
"Chinese New Year demand should support the precious metals today," said one Asian dealing desk overnight.
 
But "with Chinese New Year just a week away," says another, "physical demand looks disappointing, with premiums remaining soft."
 
Shanghai's main gold contract closed Friday at the equivalent of $2.90 per ounce above comparable London quotes, only a little above the last 6 months' average.
 
New data this morning showed bank lending in China jumping to a 5.5-year high in January, but so-called 'shadow bank' lending continued to reined in.
 
Growth in China's broader M2 money supply measure slowed to 10.8% per year.
 
With crude oil sinking and the Dollar rising sharply in January, US export prices fell sharply below analyst forecasts last month, separate data showed, down 5.4% annually.
 
Import prices fell 8.0% from January 2014, the Bureau of Labor Statistics said.
 
Priced in US Dollars, gold bullion has now dropped two-thirds of 2015's earlier 10% gain.
 
The 20-nation Eurozone economy grew faster than forecast, end-2014 figures said Friday, driven by a doubling in Germany's GDP growth from analysts predictions to 1.6% annualized.
 
The Euro rallied to a 1-week high on the currency markets near $1.1430 – an 11-year low when first hit in late January.
 
Eurozone investors buying gold bullion today saw the price hold below €1080 per ounce, down 1% from last Friday and halving the New Year's 19% surge.
 
The quantity of gold bullion needed to back shares in the SPDR Gold Trust (NYSEArca:GLD) slipped 0.2% Thursday, down to 771 tonnes after only the third daily reduction of the last month.
 
From GLD's peak of late 2012 to the new 6.5-year lows hit at start January, the trust's holdings fell on 43% of trading days as shareholders sold.
 
"Gold prices surprised us once again on Thursday," says a note from US brokerage INTL FCStone, "finishing slightly higher despite a noted de-escalation in some of the economic and geopolitical hotspots that we has been watching."
 
Greece's new finance minister Yanis Varoufakis is due to meet counterparts from the other Eurozone states on Monday to recommence talks over Athens' bid to renegotiate its bail-out loans.
 
"If a temporary [Greek] agreement is reached, we very well could see the next 'shoe to drop'...with a likely test of the $1200 mark being a very real possibility."
 
Fighting in eastern Ukraine meantime escalated ahead of Sunday's ceasefire – brokered by Germany and France with Kiev and Moscow – according to press reports.

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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