Gold News

Gold Bullion Touches 4-Week High as China Trade Data Beat Expectations, Crude Oil Slump "Threatens US Shale"

GOLD BULLION reversed most of a 1.2% rise Monday lunchtime in London, dropping back from 4-week highs above $1237 per ounce as world stock markets erased an earlier slump.
 
New data from China showed a 15% surge in exports during September, plus 7% growth in imports – both beating analyst forecasts.
 
Chinese Premier Li Keqiang repeated Beijing's annual GDP growth target of 7.5% in a speech Friday, calling it "a medium to high tempo".
 
Shanghai gold prices rose Monday to their highest levels in a month, extending the premium over bullion settled in London to $4.60 per ounce.
 
The Dollar meantime held little changed after closing last week lower – "the first time in three months," says bullion and base-metals analyst Ed Meir at brokers INTL FCStone, "ending an incredible run to the upside."
 
European Central Bank chiefs disagreed openly at the weekend over whether the ECB should begin its recently announced balance-sheet expansion, creating money to buy financial assets and weaken the currency.
 
Also speaking at the International Monetary Fund's annual meeting in Washington, " weaker than anticipated growth" outside the United States may delay the Federal Reserve ending its QE and mean it keeps zero interest rates for longer, hinted US Fed vice-chair Stanley Fischer. 
 
"The consequences for the US economy could lead the Fed to remove accommodation more slowly than otherwise."
 
US and other major government bond yields were unchanged Monday morning, while silver prices missed gold's overnight rally, holding in a tight 20-cent range around last week's finish at $17.39.
 
Brent crude oil contracts meantime fell near fresh 4-year lows after Iraq joined Saudi Arabia in agreeing lower prices with Asian customers.
 
"The world's top oil exporter," explains Reuters, "Saudi Arabia has privately told oil markets that it is ready to accept oil prices perhaps down to $80 a barrel, probably to fend off competition as rival producers expand."
 
"If prices go to $80 or lower," Bloomberg last week quoted brokerage Jefferies' vice chairman Ralph Eads, "then we are going to see a reduction in [US shale-oil] drilling activity" – widely seen as feeding the glut of supply pushing down prices.
 
New data late Friday showed speculative traders in US gold futures & options raising their bearish bets against the price rising to a new 14-month high last week.
 
The same group's bullish betting also increased however, leaving their net position bullish and unchanged at the equivalent of 208 tonnes of gold bullion – still below 40% of the average "spec net long" over the last 5 years.
 
So-called "unreportable" positions – primarily private individuals trading futures and options – were net bearish on gold again, the 4th such week this year.
 
Gold bullion needed to back the giant SPDR Gold Trust meantime fell 0.9% last week, shrinking to new 6-year lows beneath 760 tonnes.
 
"Investors in ETFs have been cutting their holdings," says London market-making bank and Gold Fixing member Scotia Mocatta in its new monthly report, "as other asset classes appear to have more to offer.
 
"Gold prices are now likely to reflect physical demand more, with its monetary attributes taking more of a back seat."

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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