Gold News

Gold Bullion "Selling Now Done", Growing Bearishness "Good News for Bugs"

GOLD BULLION prices held steady around $1230 per ounce in London trade Monday morning, ticking upwards as Asian stock markets closed higher after strong data from China but European shares slipped.
 
The Euro rose to 6-week highs vs. the Dollar on the FX market, capping gold bullion priced in the single currency beneath €900 per ounce.
 
Silver rose 0.7% as commodities also gained, together with major government bond prices, reaching $19.65 per ounce.
 
"A lot of [gold] selling has now been done," reckons Frances Hudson, co-manager of $271 billion at Standard Life Investments in Edinburgh, quoted by Bloomberg.
 
"So you could see a more stable base for the gold price to build on."
 
Last week the world's biggest gold ETF, the SPDR Gold Trust (ticker: GLD) shed another 0.9% of the gold bullion held to back its exchange-traded shares, taking the total down to a near 5-year low beneath 836 tonnes.
 
Bearish betting by money managers, hedge funds and other speculators meantime rose in the week-to-last-Tuesday to the equivalent of 315 tonnes of gold bullion by value, well above the 250-tonne average of 2013 to date.
 
That compares with the previous 5-year average short position of 96 tonnes.
 
Overall, however, so-called speculative traders remain bullish in aggregate, with their long position in US gold futures and options outweighing those short bets by 151 tonnes – the smallest "net long" since midsummer's multi-year lows.
 
"This could be just the news that the gold bugs wanted to hear," says the Financial Times
 
"More and more traders have lost faith in bullion. Yet the more that a consensus [for lower 2014 prices] builds, the closer to a possible turn in sentiment."
 
"We could expect a short-term recovery in gold prices," Reuters quotes Hong Kong economist Alexis Garatti at Haitong International Research. 
 
"[Because] in our view, the mood of the market is exaggerated regarding the macroeconomic situation in the US."
 
New data from Beijing meantime showed a surge in China's exports for November, taking the overall trade surplus to a sudden 4-year high.
 
The world's largest gold mining producer, China is now also the world's largest end-buyer of gold bullion, overtaking India in 2013, which will likely see a drop in gold imports to 900 tonnes according to comments Monday from market-development group the World Gold Council.
 
Gold bullion prices on the Shanghai Gold Exchange rose Monday in brisk trade, even as the Yuan exchange rate was raised to new highs against the Dollar by the People's Bank.
 
"There's so much room to grow," says World Gold Council investment director for the Far East, Roger Liu, quoted by the Wall Street Journal.
 
Noting China's current gold bullion accumulation of 4.5 grams per head per year, and contrasting it with the global 24-gram average, "I expect more [ ETF trust fund] products along the lines of SPDR Trust to pop up in China," Liu concludes.

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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