Gold News

Gold Bullion Slips Ahead of US Jobs, GDP and Fed Tapering News

GOLD BULLION prices in London, center of the world's precious metals trade, slipped Wednesday morning, dropping 0.8% from yesterday's spike to $1300 by lunchtime as traders awaited US jobs, GDP and monetary policy news.
 
The US Federal Reserve is expected to taper a further $10 billion from its now $55bn monthly QE asset-purchase program in today's policy statement.
 
European stockmarkets meantime held flat ahead of the ADP Payrolls and Q1 economic growth data.
 
"That should have a negative impact" on gold bullion prices, Reuters quotes consultant analyst Peter Fertig at Quantitative Commodity Research, "unless we get some surprising developments again on the geopolitical front."
 
"Gold will continue to react to developments" in Russia and Ukraine, agrees ANZ Bank's commodities team, "[but] we suspect that much of the 'safe-haven' buying in gold has taken profit."
 
Acting Ukrainian president Turchynov said Wednesday his security forces are "frankly helpless...unable to quickly take control" of eastern towns and facilities being seized by pro-Russia protestors and militia.
 
KyivPost reports Ukraine troops are " preparing for war" by digging in some 9km from Belarus and 37km from Russian borders.
 
"Tensions in the Ukraine are doing most of the heavy lifting for gold right now," reckons Swiss investment and bullion bank UBS in a note.
 
"Without this supporting factor, gold prices would be lower."
 
Over in China, bullion traded via the Shanghai Gold Exchange's most active contract closed for the May Day holidays some $2 per ounce above London quotes today.
 
That was the strongest premium since February on data compiled by BullionVault, and came despite a drop in the Chinese Yuan to fresh 18-month lows vs. the US Dollar on the currency market.
 
China will this year overtake the US as the world's largest economy, says the Financial Times, citing purchasing power parity data accounting for differences in costs from the World Bank's International Comparison Program.
 
While March imports of gold bullion to China fell hard from February's near-record levels on latest data, "Gold has now started to flow into India," Bloomberg quotes Standard Chartered Bank's head of metals Jeremy East, noting an uptick to the world's former No.1 consumer nation – overtaken by China in 2013 as the Indian government imposed an effective ban on legal imports.
 
Ahead of this weekend's 'auspicious' Hindu festival of Akshaya Tritiya, "The views are there's a chance [the authorities] will relax the gold-imports policy" after the current elections end, says East.
 
But consumer gold jewelry and bullion buying for Akshaya Tritiya 2014 "thus far hasn't been overwhelming," counters UBS.

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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