Gold News

Gold Bullion Drops for 2nd Week After Near-Record Run, Shanghai Discount "Says China Demand Slowing"

GOLD BULLION prices bounced from new 6-week lows beneath $1290 per ounce Friday lunchtime in London, heading for a second weekly drop after rising 6 weeks running – a feat seen only 65 times since 1968.
 
The Dollar price of gold has beaten that stretch of week-on-week gains only 10 times in the last 46 years.
 
US Treasury bonds also fell for a second week Friday, nearing as did gold bullion the first monthly loss of 2014.
 
World stock markets ticked higher together with crude oil and copper prices.
 
A near-record UK current account deficit for end-2013 failed to dent the British Pound on the currency markets, helping the Sterling price of gold bullion drop to last June's crash low of £774 per ounce.
 
Silver prices meantime whipped around $19.80 per ounce, losing some 2.5% for the week.
 
"We may be looking at extended consolidation above $1274" in gold bullion, Reuters quotes Phillip Futures analyst Joyce Liu.
 
Calling it "a key technical level that offered strong resistance when prices were on the ascent in January," that $1274 level "may prove strong support now as prices decline" Liu says.
 
But the gap between London and Shanghai gold prices – "an important indicator" according to ANZ analyst Victor Thianpiriya of demand in China, the world's heaviest consumer market – held at a discount for the fourth day running.
 
Closing $4.50 per ounce below the international benchmark of London settlement, spot prices on the Shanghai Gold Exchange "suggest that the demand in China is slowing," says Thianpiriya, "and we have certainly seen that through our physical volumes as well.''
 
New data meantime showed fresh deflationary pressures across the 18-nation Eurozone, with import prices to Germany falling in February and consumer inflation turning negative in Spain this month
 
But consumer confidence on the European Central Bank's survey has jumped to its strongest level since mid-2011, separate data showed Friday, "strengthen[ing] the hands of the hawks," reckons ING Bank analyst Martin van Vliet, ahead of next week's ECB policy vote.
 
US central bank policymaker Charles Evans of the Chicago Fed said in a speech in Hong Kong Friday that low inflation and high unemployment should delay any Dollar rate-rise until mid-2015
 
But St.Louis Fed president James Bullard calls for rates as high as 4.25% by end-2016 speaking to Reuters.
 
"You have to keep in mind I tend to be a more optimistic member of the committee," Bullard told Reuters Insider TV.
 
Meantime in Ankara, the government of Turkey – the world's 4th heaviest gold bullion buying nation – called yesterday's leak of video showing senior officials discussing possible military action in neighboring Syria "villainous" and a "declaration of war" by opposition politicians, and added YouTube to its block on Twitter.

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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