Gold News

Gold Prices Sink, Silver Reverses 50 Cent Spike as Euro Rallies, Swiss Gold Exports to China Drop 60% But ETFs Expand Again

GOLD PRICES fell hard Tuesday lunchtime in London, dropping $20 per ounce as the Euro rallied – but commodities and Western stock markets cut earlier strong gains – and new data showed a sharp slowdown in gold imports to China.
 
Priced in Euros, gold slid 2.7% from last Friday's finish to hit near 2-week lows at €1106 per ounce.
 
But priced in Australian Dollars, gold earlier leapt to its higher level since October 2012 as the AUD sank following a "surprise" cut to the Reserve Bank's key lending rate to a new record low of 2.25%.
 
Shanghai's stock market meantime recovered yesterday's 2.5% plunge on weak manufacturing data on Tuesday.
 
Chinese gold premiums over London prices – a measure of local demand in the world's second-heaviest gold buying nation – ticked higher to $2 per ounce today.
 
"Despite investors' concerns for slower growth in China," says a note from international bank and London bullion market maker HSBC, "the economy and subsequently wages are still rising nonetheless.
 
"This supports our expectations for China's growing appetite for gold."
 
But new Swiss trade data, released Tuesday, show gold exports from the world's No.1 bar refining center to the No.2 gold buying nation fell 60% by weight in 2014 from the year before, reports Fast Markets.
 
Month on month, "China's total imports of gold from the two key locations – Switzerland and Hong Kong – were down by 26% in December," adds Swiss bank and major world shipper UBS.
 
"This ties in with underwhelming interest observed during this period, as well as feedback from local counterparts."
 
Looking ahead to this month's Lunar New Year – typically the strongest single period for Chinese household gold demand – gold's recent price rise means that wholesalers "have probably opted to stay on the sidelines," UBS concludes, "choosing instead to use up whatever inventories are already on hand" while waiting for prices to drop before re- stocking.
 
Back in London on Tuesday, silver in Dollar terms reversed a 50-cent gain, dropping 2.7% after spiking with energy and base-metal commodities to trade unchanged for the week so far at $17.25 per ounce.
 
The iShares Silver Trust (NYSEArca:SLV) yesterday expanded 0.3%, adding 46 tonnes to the metal needed to back its shares in issue, but holding below the 10,000-tonne level breached for the first time in a year last month.
 
Monday also saw the giant SPDR Gold Trust (NYSEArc:GLD) add metal, as demand for its shares expanded.
 
That extending the growth in GLD holdings from start-January's fresh 7-year low to almost 62 tonnes – the fastest addition since gold prices peaked in summer 2011 – taking total backing to 766 tonnes.

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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