Gold News

Gold $1150 'Important' If Not 'Deadly' as Silver ETF Bullion Shrinks to 3-Year Low on 10% Price Jump

GOLD BULLION failed to hold above $1150 per ounce for the second session running in London on Wednesday, edging back to $1145 as silver crept back above $16 for a 10% gain in 1 week.
 
European stock markets meantime cut earlier gains back near zero for a third day in succession, as New York equities held flat and US Treasury bonds retreating, nudging yields higher once more from last week's sudden spike to 2013 lows after Friday's shock slowdown in US jobs data.
 
"A failure to break $1150 could hence prove deadly for the remaining year," says one bullion bank's sales desk of the gold price, now "waiting and watching for a decisive break."
 
That level of $1150 marks "the technically important 100-day moving average" of gold prices, adds German bank Commerzbank.
 
"If gold conclusively breaks $1150 and holds above," adds David Govett at London brokers Marex Spectron, "then we may see...$1175, but I don't see the price moving much higher than that.
 
"The market was definitely short last week," Govett adds, pointing to bearish bets against prices being forced to close at a loss on the rise, "and in the wake of the very weak [US jobs data] has had to cover into a very illiquid market...with the white [metals of silver and platinum] leading the way."
 
Bullion holdings at the giant SPDR Gold Trust (NYSEArca:GLD) were yesterday unchanged despite gold making near 2-week price highs, reflecting constant demand for the trust fund's shares and needing 688 tonnes of backing – some 0.2 tonnes below Friday's 5-week high, but halving from the peak of end-2012.
 
The largest exchange-traded silver fund, in contrast, shrank Tuesday to a new 3-year low, down 0.5% for the iShares Silver Trust ETF (NYSEArca:SLV) to need just less than 9,856 tonnes to back its shares – also traded like the GLD on the New York Stock Exchange.
 
Germany's Bundesbank – the world's second-largest national gold holder behind the US – meantime published a 2,308-page PDF listing its entire bullion reserves, stating inventory number, weight and fineness but not brand or bar serial number in a bid to disprove what German media called "conspiracy theories that it has been lying about the amount of gold it holds."
 
Listing over 95,000 bars it holds in Frankfurt, the Bundesbank also lists the weight and fineness of more than 35,000 bars held at the Bank of England in London for a custody charge, plus 24,500 held at the Banque de France in Paris (all scheduled to be removed to Germany by 2020), and a further 115,431 held for no storage charge at the Federal Reserve Bank of New York.
 
The Bundesbank's top-line data show an average fineness of 0.997 pure gold in the bars – meeting the minimum fineness of 0.995 set by the international wholesale market's London Good Delivery standards.
 
The average weight of the bars reported today on the Bundesbank's list also suggest they all meet LGD standards – the largest size in common production – at 402 Troy ounces, some 12.52 kilograms.
 
New data overnight from Beijing meantime suggested that the People's Bank of China added another 15 tonnes to its gold bullion reserves in September, the third such addition since June, when it announced a 58% rise from 2009 after transferring metal from other accounts.
 
Slower than August or July, that 15 tonnes remains almost twice the average monthly pace of gold accumulation over the last 6 years.

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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