Gold News

Gold Bullion Surge 'Out of Steam', Silver Erases 7% Jump But Brexit Weighs on Fed Before US Jobs Data

GOLD BULLION slipped $15 per ounce from yesterday's new 3-year highs at $1375 in London trade Thursday morning, dropping as European stock markets rallied despite the UK's continued paralysis over starting Brexit negotiations with the remaining European Union.
 
Average UK house prices rose 8.4% per year in June to new record highs, said the Halifax mortgage lender today – the slowest pace since last summer.
 
Seven commercial property investment funds have now shut the door to clients selling following the Brexit vote, with another charging a 17% redemption fee.
 
A vote to Leave by the UK would pose "significant" risks to growth across the 19-nation Eurozone, the European Central Bank policy team agreed at their start-June meeting, notes released today showed.
 
"I am beginning to think the [gold] rally is running out of steam and may be due for a pullback," says a note from David Govett at brokers Marex Spectron in London.
 
"We need some fresh impetus to continue higher...Unless more dire news comes out of the UK or elsewhere, I suspect there may be some profit taking ahead of the weekend."
 
"The yellow metal continues to feed off global uncertainty," agreed the Asian dealing team at Swiss bullion refining and finance group MKS overnight.
 
"However the focus now shifts to Friday's [US jobs] NFP print for an indication as to whether May's 38,000 result was just an aberration or a sign of cracks starting to appear in the US recovery."
 
The worst monthly US jobs data in 6 years, the release of May's first Non-Farm Payrolls estimate saw Dollar gold prices jump 2% as traders scaled back their bets that the US Federal Reserve would raise interest rates.
 
Today's private-sector ADP estimate put June's net jobs growth at 172,000 – ahead of Wall Street forecasts and ahead of its 168,000 estimate for last month.
 
Betting on US interest-rate futures ahead of the Fed's July meeting in 3 weeks' time now puts the odds of "no change" above 97%, with no chance of a raise and a small possibility of a cut.
 
After the giant SPDR Gold Trust (NYSEArca:GLD) reported its largest 1-day inflow of metal since May 2010 for Tuesday – the day after the US Independence Day holiday – the ETF's reported total was cut 0.3% on Wednesday.
 
All told, gold-related ETF trust funds now hold some 2,000 tonnes of bullion, says Bloomberg.
 
That equals two-thirds of 2015's record global gold mining output.
 
The giant iShares Silver Trust (NYSEArca:SLV) meantime added almost 150 tonnes yesterday, jumping to its largest size since end-2014.
 
Unlike the major gold ETFs between 2012 and 2015, silver-backed trust funds continued to expand and then held firm as prices fell.
 
Silver ETF holdings now stand around 40% of 2015's record-high global mine output.
 
Silver prices on Thursday again retreated faster than gold, erasing the last of this week's earlier 6.9% surge to 2-year highs above $21 per ounce.
 
Gold prices in Shanghai today held near Wednesday's new 3-year highs above CNY290 per gram.
 
That held the Shanghai premium, over and above London quotes, at $2 per ounce - in line with the typical incentive offered to new imports into China over the last two years.
 
New data showed Thursday that the People's Bank of China added 16 tonnes to state gold bullion reserves in June, taking its hoard to 1,823 tonnes.
 
June's daily average Dollar price rose 1.4% from May, setting the highest monthly average since August 2014.

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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