Gold News

Gold Investment "Appallingly Bad Safe Haven" as Scottish Vote Nears, OSCE Calls for Delay to Russia Sanctions Over Ukraine, Fed Rate Risk "Ignored by Public"

GOLD INVESTMENT prices retreated to yesterday's 3-month lows against the US Dollar lunchtime Wednesday in London, trading at $1248 per ounce as world stockmarkets slipped together with major bond prices.
 
Brent crude oil prices held below $100 per barrel for a third day as the US Dollar pushed back towards 14-month highs against the Euro and the British Pound touched its lowest level since November 2013.
 
Gold investment prices for UK savers fell faster, however, dropping 1.7% from Monday's spike to trade near 1-week lows at £774 per ounce as leaders from Westminster's 3 main parties campaigned for a "No" vote in Scotland's independence referendum next week.
 
Analysts at Swiss bank Credit Suisse warn of "capital flight" and a "deep recession" in Scotland if it votes to leave the United Kingdom.
 
The UK's banking deposit scheme – the FSCS – said today the existing £85,000 level of state guarantee will "likely" continue for customers of Scotland-based banks during any transitional period.
 
The Organization for Security & Cooperation in Europe (OSCE) meantime said new Western sanctions against Russia over Ukraine should be delayed until the current ceasefire has "chance [to move] in the direction of a real political process." 
 
Ukraine's president Poroshenko today offered pro-Russian separatists "more autonomy" if the country's eastern regions do not break away.
 
Gold and silver investments "have behaved appallingly as a safe haven," says David Govett at commodity brokers Marex Spectron's London office, "and with the current trend for a strong Dollar [they] will attract very little demand.
 
"This is now a marketplace that has had its day in the sun."
 
Despite the strongest trading volume in 3 weeks, gold prices in Shanghai were "today trading at a discount to loco-London gold," notes Swiss refiner MKS.
 
"It seems that physical demand is still soft from the world's largest bullion consumer."
 
Chinese premier Li Keqiang yesterday let slip that the country's money-supply growth fell to 12.6% in August – data not due for release until later this week, and the weakest pace in 5 months according to Reuters.
 
Trading down to $1248, wholesale investment gold, says Germany's Commerzbank in a note, has "[come] close to falling below the corridor in which it has been trading for roughly six months now.
 
"The main factor weighing on the gold price continues to be the firm US Dollar," it notes, adding that yields on 10-year US Treasuries rose Tuesday above 2.5% p – the highest level since early August and "another reason why investors are still likely to refrain from purchasing gold despite the already low price level."
 
Analysis published Tuesday by the San Francisco Federal Reserve Bank says investment markets are ignoring the chances of a US interest-rate rise sooner than later.
 
"The public also appears to be less uncertain about the future course of monetary policy than [Fed policy-making] participants," the research adds.

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