Gold News

'Rate-Hike Kryptonite' Sees Gold Price Slip on Anniversary of Spring 2013 Crash, Uber IPO 'Marks the Top for Stocks'

GOLD PRICES marked the 6th anniversary of spring 2013's historic crash by erasing the last of this week's prior 1.5% gain in London on Friday, dropping back as Europe's Brexit crisis went on pause and analysts studied the proposed $10bn stockmarket listing of ride-hailing app Uber.
 
Asian equities held flat overall but Europe rose, edging the MSCI World Index up towards new 6-month highs, some 5% below January 2018's record peak.
 
Major government bond prices meantime fell, driving 10-year US Treasury rates up to 4-week highs at 2.55%, after new data said Eurozone industrial production fell in February less than economists forecast.
 
March's new bank lending in world No.2 economy China blew past expectations, nearly doubling the prior month's growth.
 
"Higher interest rates are just kryptonite for gold," says financial author Scott Nations, speaking to CNBC, "[and] all of the data [on] inflation and jobs says that that majority of the Fed committee which sees rates unchanged through the end of 2019 are wrong.
 
"Rates are likely to be higher. Horrible for gold."
 
Chart of 10-year US Treasury yield (green, left) vs Dollar gold price. Source: St.Louis Fed
 
With April 12th marking 6 years since gold prices fell through what had been key support at $1530 – the start of gold's historic 25% plunge by end-June 2013 – the metal today slipped to $1291 per ounce, erasing almost all of 2019's rise to date.
 
"US [investment] groups are [meantime] scrutinising restrictions on selling and hedging" stock in Uber's IPO prospectus, says the Financial Times, as shares in taxi-app competitor Lyft continue "trading below its offer price" of a fortnight ago.
 
Lyft (NASADQ: LYFT) debuted at $72 a share, jumped to $80 that day but closed last night at $61.
 
Reporting 14 million rides a day across more than 700 cities on 6 continents, "Uber is officially in the pole position," says Fortune magazine, "out-pacing rising competitor Lyft by more than $9 billion in revenue and at least 60 million users."
 
"For the Uber optimists," says Time magazine, the prospectus brings "plenty to like...[but] this is not a hypergrowth company anymore, at least not in its biggest business of rides on-demand."
 
Uber's prospectus notes in "risk factors" that its 3 target markets of "personal mobility, meal delivery, and logistics...are highly competitive, with well-established and low-cost alternatives...low barriers to entry, low switching costs, and well-capitalized competitors."
 
"We have incurred significant losses since inception," Uber goes on, reporting sales of $11.2bn for its most recent financial year with losses of $3bn.
 
"We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability."
Following this week's delay to the UK's exit from the European Union, gold prices meantime fell Friday to a 5-week low in Euro terms at €1142.50 but only a 1-week low in Sterling terms at £984.
 
"It is our national duty as elected members of this House...to seek to work together to deliver what the British people voted for," said Prime Minister Theresa May in Parliament yesterday.
 
"If we want to get on with leaving, we need to start this process soon," she said, before Parliament shut for a 2-week Easter break.
 
"Brexit is being betrayed...Britain is being humiliated...It's time to replace the useless political establishment with strong leaders," said the UK's new Brexit Party today, launched across the media by former 3 times UKIP leader Nigel Farage and announcing a raft of candidates for May's European elections.
 
"I said that if I did come back into the political fray it would be no more Mr Nice Guy and I mean it."
 
A member of the European Parliament for the UK's south-east since 1999, Farage quit UKIP entirely in December in protest at how the party he helped found in 1993 " has changed...obsessed with the issue of Islam...fighting a religious crusade...[and] obsessed with this figure Tommy Robinson" – founder of the far-right English Defence League.
 
"It is clear the victory of populist parties across the European Union will bring, one after the other, 28 Brexits," said former Italian prime minister Enrico Letta this week.

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.

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