Gold News

Gold ETF Bullion Backing Recovers to April 2013 Price Crash Level as Dollar Sinks

GOLD ETF trust fund trading saw bullion prices rise within $5 per ounce of last September's 13-month high on Wednesday in Londonas the US Dollar fell to new 3-year lows on the FX market and Japan led a retreat in world stock markets from record-high levels.
 
As gold prices moved above $1352 per ounce in wholesale dealing, major government bond prices fell again, driving the yield offered to investors higher once more.
 
 
Non-Dollar investors however saw gold bullion hold unchanged overall, with the Euro price recovering to a gain of 0.6% for 2018 to date at €1093 per ounce.
 
The UK gold price in Pounds per ounce flirted with its lowest level in a month, dipping again beneath £953 as Sterling rose following news of the lowest UK jobless rate in four decades but continued negative growth in average earnings against inflation in the cost of living.
 
Investor demand for gold-backed exchange-traded trust funds saw ETF holdings expand "to 2,250 tons on Monday," says Bloomberg, citing its own data, "the highest since May 2013."
 
Broader data from the mining-backed World Gold Council however, when adjusted by ETF providers' own updates, puts the total above 2,375 tonnes as at end-Tuesday – the highest since 2013's gold price crash began with a surge of ETF liquidation that April.
 
If gold priced in Dollars ends January at this level, it would mark the highest monthly close since August 2013.
Chart of global gold-backed ETF trust fund holdings in tonnes. Source: BullionVault via World Gold Council and others
 
"Strongly performing equities and other risk assets tends to be negative for gold," says the latest weekly note from precious metals strategist Jonathan Butler at Japanese conglomerate Mitsubishi.
 
"However, increasing evidence of hedging of riskier equity and corporate bond trades in gold helps explain why bullion is continuing to hold its own in this ostensibly challenging environment."
 
"Not only do we believe the price risks for gold are skewed to the upside in 2018," says analyst Suki Cooper at Asia-focused investment and London bullion market-making bank Standard Chartered, "we think gold prices could test five-year highs amid continued geopolitical and political uncertainty."
 
"The scope for rising inflation, the interest rate-hiking trajectory nearing the end of its cycle, and a stock-market correction could reignite interest in gold."
 
Silver also popped higher on Wednesday, tracking but still lagging gold prices with a 1.9% rise for this week so far at $17.34 per ounce – the highest level since last Tuesday.
 
Platinum prices meantime rose within $1 of its highest price since March 2017, gaining 16.7% from last month's near 2-year lows against the Dollar to touch $1021 per ounce.
 
For Euro investors platinum has risen 10.8% since mid-December's near 9-year low.

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.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals