Gold News

Gold Price Jumps Again on 3-Month High in Shanghai Trading Volume, Western Fund Managers "Warm" But Still Think "Too Early"

GOLD PRICE gains of 4.0% last week were extended Monday morning, with silver prices also jumping again as world stock markets rose for the 9th day running.
 
Asian trade saw the gold price jump to $1330 per ounce, its highest level since end-October.
 
The price of wholesale silver investment bullion bars jumped within 2 cents of $22.00 per ounce, rising 10.0% from this time last week.
 
"My view is that it may be too early to start allocating heavily to gold," says London multi-asset fund manager Eugene Philalithis at Fidelity.
 
"However, if the view on gold prices changed then I think mining stocks would deserve a look."
 
"The market's friendliness to gold is all very new," says a note from Swiss investment bank and London market-maker UBS.
 
"While US clients are warming to gold again, they're not outright bullish. Some investors are just looking for short-term opportunities. There remains a large dose of hesitancy."
 
Latest data from US regulators said Friday night that speculative traders raised their bearish bets against the gold price yet again on Comex last week, but their bullish bets grew faster.
 
So overall, the speculative net long position in gold futures and options rose to the equivalent of 310 tonnes, the largest level since the gold price was last above $1300 in early November.
 
Speculative traders in silver also grew their net long position. But bullish silver bets barely rose, while bearish bets were cut by almost one-fifth in the week-ending last Tuesday.
 
Meantime in China today – where new data showed bank lending surging by $217 billion in January, more than 170% the pace of new lending in December – gold and silver trading in Shanghai leapt to multi-month highs as prices rose.
 
China's key gold price pushed up to a $7 premium above London spot, while trading activity totaled more than $2.0bn, its highest level since mid-November.
 
Silver trading on the Shanghai Gold Exchange reached almost $2.5bn in the most popular contract, the greatest level since mid-September. 
 
"For the first time in a little while," says Walter de Wet at Standard Bank, "Asia was a keen buyer of gold this morning...with not only the [Shanghai] premium moving higher...but the gold price also finding good support."
 
"China’s unfolding credit crunch is having an unforeseen and dramatic impact on gold prices," reports The Daily Telegraph in London, "as investors urgently stock up on the precious metal."
 
The US Dollar meantime fell to a 3.5-year low to Sterling as New York markets stayed closed for Presidents Day.
 
Broad commodities indexes ticked 0.3% higher.
 
Italian, Spanish and other "weaker" Eurozone bond prices rose sharply, pushing 10-year yields down 5 basis points, while German and UK bonds were unmoved.

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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