Gold News

Gold ETFs Shrink, Price Flat as Ukraine Saber-Rattling Offset by Omicron Vaccine Claims

GOLD ETF and bullion prices held dead-flat for the week so far in London trade Wednesday while US equities shrugged off a retreat in global stock markets as increased tensions between Nato and Moscow over Ukraine were offset by drugs-maker Pfizer claiming that its Covid vaccine can provide strong protection against the Omicron variant.
 
Government bond prices were mixed, holding longer-term borrowing costs little changed near the lowest in 3 months, while energy and industrial commodity prices rallied from their recent retreat from multi-year and new record highs.
 
With gold trading at $1782 per ounce – unchanged from last Friday's finish – the price of silver slipped over 0.6% to $22.40.
 
Gold in 2021 has seen a switch from last year's heavy investment demand on the start of the pandemic, said Suki Cooper of London bullion market maker and Asian-focused bank Standard Chartered to Bloomberg overnight, with central banks buying more metal as gold-backed ETFs have retreated in size, as has increased jewelry demand across the big centers of China and India too.
 
After needing an additional 800 tonnes of bullion backing in 2020, Cooper noted, gold ETF trust funds have shed around 200 tonnes worldwide so far this year.
 
The giant SPDR Gold Trust (NYSEArca: GLD) yesterday paused a 4-session liquidation by investors, retreating to its smallest size in almost 3 weeks.
 
Smaller competitor the iShares gold product (NYSEArca: IAU) shrank again however, albeit by 0.1% to its smallest size since the start of November.    
 
Chart of giant GLD + IAU gold ETFs in tonnes of bullion backing. Source: BullionVault
 
Pfizer (NYSE: PFE) today said a double-jab and then a booster shot of its vaccine is as effective against Omicron as the double jab has been against the original variant of Covid, first detected and breaking out in Wuhan, China 2 years ago this month.
 
"Dow futures spike up," said one market pundit reporting the claims.
 
"[But] we've got this geopolitical issue bubbling in the background and that's driving a small bid in gold," Reuters quotes Stephen Innes at SPI Asset Management in Singapore, referring to US-Russian tensions over Moscow's "massive build-up of troops" on its western border with the former fellow USSR state.
 
The US and its Nato allies will respond with "strong economic and other measures" if Russia invades Ukraine, President Joe Biden told his opposite number Vladimir Putin in a 2-hour video call Tuesday.
 
"Nato expansion is unacceptable," Putin said. "It is one of the key questions in preserving Russia's security."
 
After new data yesterday put both imports and exports from global manufacturing giant China markedly higher in November from October, with GDP growth across the 19-nation Eurozone also well ahead of analyst forecasts for Q3, new figures on Wednesday said job openings in the USA have continued to grow, rising back towards July's fresh all-time records on the 2-decade Jolts series.
 
"Freight rates' dislocations are topping out but there's still a way to go," says precious metals specialist Rhona O'Connell at brokerage StoneX, reviewing the pandemic supply-chain pressures that have helped drive global inflation up to multi-decade highs.
 
"If inflation continues to come out strong" in Friday's US consumer-price index data, says senior researcher Harshal Barot at the specialist Metals Focus consultancy, "that would cement expectations for the start of rate hikes by mid-2022.
 
"But the gold market has largely priced such rate hikes, so gold's decline should be temporary and limited."

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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