Gold News

Gold Bullion "Finds Chinese Bargain-Hunting" at 2014 Lows as Shanghai's New FTZ Contracts Open to Thin Trade, US & Italy Jewelry Demand Grows

GOLD BULLION prices ticked up to $1224 per ounce in London on Friday, rallying 0.7% from yesterday's new 2014 lows against the Dollar but heading for a third weekly loss in a row.
 
World stock markets rose – and trading began in New York's biggest ever IPO, online Chinese retail site Alibaba – as the US Dollar pushed the Euro back towards Thursday's fresh 15-month low.
 
Gold bullion for UK investors meantime reversed an overnight drop to new 2014 lows, hit as the Pound jumped on news that 55% of Scottish voters said "No" in yesterday's independence referendum.
 
Priced in Sterling, gold this morning fell to £737 per ounce – down £50 per ounce from the shock pollster report of a possible "Yes" vote less than two weeks ago.
 
"We expect further [gold] weakness through to December," says one bank analyst's note.
 
"Investor positioning points to further downside."
 
But in Asia, "Physical demand is very slowly creeping in at these lower levels," says one trading desk [and] when we did break through $1220 early Chinese bargain hunters were waiting to scoop the market."
 
Trading volume in the Shanghai Gold Exchange's most popular contract today jumped to its heaviest level since June 20th, when Yuan gold prices rose almost 3%.
 
Yuan prices for gold bullion fell 0.5% to new 2014 lows Friday, but held a $5 premium to equivalent London quotes.
 
The SGE's new international gold contracts meantime – traded for bullion in Shanghai's free-trade zone – were reported as closing up to $94 per ounce above world prices.
 
Dealing volume in the FTZ's wholesale gold-bullion contract was barely one-fifth of one per cent of the most active domestic trade.
 
"Gold demand in China remains slow," says a monthly review from Australia's ANZ Bank, "reflected in low import volumes compared to the buying frenzy of 2013.
 
"Onshore stocks are elevated, suggesting that weak import demand could persist for the next few months [before the] seasonally strong Chinese New Year period."
 
Despite recent improvements, gold bullion inflows to India – the former No.1 consumer nation – "are still well below the monthly averages of 2012 and 2013," says French investment and bullion bank Natixis.
 
Only the United States saw "any notable gain in physical demand in the first half of this year" says Thomson Reuters GFMS in its new Gold Survey 2014 Update, with an 8% increase in jewelry fabrication "driven by weaker gold prices and improving consumer sentiment."
 
Luxury jewelry-producer Italy will this year become a net importer of gold bullion for the first time since 2008, new London-based consultancy Metallis said in a note on Tuesday.

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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