Gold News

Gold Prices Bounce from 2013 Crash Low as Dollar Falls on Weak US Data, Euro Price Hits Sharpest Drop in 2 Months

GOLD PRICES fell to 2-week lows against a rising Dollar in London trade Tuesday, dropping 2% for the week so far before turning higher as the US currency fell on weaker-than-expected economic data.
 
Bouncing higher from $1184 – the low set by Spring 2013's crash which held until November 2014 – wholesale gold bar prices recovered $1196 per ounce after the Census Bureau said US retail sales grew only 0.9% annually last month, below Wall Street forecasts.
 
The Dollar fell to a 3-session low on the FX market, Treasury bond yields retreated to 2-month lows, and US stock markets held flat.
 
Silver meantime tracked gold prices, bouncing back to unchanged for the day at $16.30 per ounce after falling to the lowest Dollar price in almost 4 weeks.
 
"[Gold's] recent high at $1224.66 is increasingly being viewed as an interim peak," says weekly technical analysis from Commerzbank's Axel Rudolph – "formed just below the 50% retracement of the [range] seen this year."
 
Also neutral on gold investment's current trend, "The near-term range appears bound between $1180 and $1220," says bullion bank Scotia Mocatta's Russell Browne in New York, "and we note the lack of a decisive bias among both trend and momentum signals."
 
"Physical buying is unusually light," says the trading desk at ICBC Standard Bank in London, "likely due to Thai and India on holidays plus many participants at the Dubai conference going on at the moment."
 
"Once again, the festival of Akshaya Tritiya is here," writes Jayant Manglik, president of retail distribution at stockbrokers Religare Securities, in the Times of India, "preceded by the inevitable rush of advertisements for buying gold and gold jewellery."
 
"Reports doing the rounds," says Swiss refining group MKS's trading team, "that the inclement weather in India has impacted severely on farmers wages [meaning] less physical demand in the world's second largest consumer of gold."
 
Whether for jewelry or investment, said a research note from consultants Thomson Reuters GFMS last week, India's gold consumption is certainly "not independent of agricultural production and yields."
 
But on historical evidence, GFMS finds, "only a production decline of more than 8% is likely to impact the consumption of gold significantly."
 
"Indian cultural affinity aside," says Religare's Manglik, "I believe one should invest in gold via a systematic investment plan, putting about 10-15% of investible surplus regularly into gold."
 
With the single Euro currency rising, and Athens denying reports that Greece is about to default on its debt repayments,  Eurozone investors meantime saw gold suffer its sharpest 1-day drop since mid-February, losing 1.2% from Monday afternoon to trade beneath €1120 per ounce.

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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