Gold News

Gold Price Weakness 'Further to Run' After Worst Week in Euros Since 2013

GOLD PRICES extended their lowest monthly finish in seven by dropping again vs. all major currencies in London on Friday, falling as UK and US stock markets began May with solid gains.
 
Slipping to $1170 per ounce in spot gold trading, the metal hit its lowest Dollar value in more than 6 weeks, erasing the week's earlier 3% gain.
 
"We are now at the lower end of the range," says one London bullion broker, pointing to gold's repeated failure to hold above $1200 since early March, "and theoretically should be looking to buy dips from here. [But] I would do so with caution."
 
Even with European markets closed for May Day, "Gold appears to be being impacted by Euro gold positioning and the unwinding of some of those positions," says a note from Leon Westgate at ICBC Standard Bank in London.
 
"For the moment silver is following suit, but that seems more on the back of habit rather than anything else."
 
Silver outperformed gold prices on Friday, holding little changed just above $16 per ounce as broader commodity markets fell.
 
Euro gold meanwhile fixed Friday at the equivalent of €1044 per ounce at the LBMA Gold Price's afternoon auction, taking the week-on-week drop to 4.5%.
 
Marking its worst 1-week loss since September 2013, gold priced in Euros today traded at the lowest price since 15th January, erasing two-thirds of that month's near-20% gain.
 
In US derivatives, contract exchange the CME yesterday barred two US traders from using its services for 60 days after accusing them of layering orders in gold futures "without intent to trade" in a pattern reminiscent of the "spoofing" allegedly done by UK trader Navinder Singh Sarao – now in jail facing extradition to the US for causing the May 2010 'flash crash' in New York equities.
 
One trader "entered small-lot orders on one side of the market in gold futures," said the CME, and the other " entered large orders on the opposite side", cancelling them when the first trader's orders were filled.
 
Back in Friday's action, "Precious metal prices are showing greater sensitivity to positive US data surprises after barely profit[ing] from a weak Dollar," says Dutch bank ABN Amro.
 
"This signals that the risk is mainly on the downside...Weakness has further to run."
 
New US data today showed manufacturing activity and consumer sentiment easing in April, while construction spending showed a 0.6% drop for March from February.
 
The Dollar rose, however, after earlier hitting new 9-week lows against the Euro.
 
"We remain bearish" on gold prices, said Thursday's technical note from bullion bank Scotia Mocatta, "with a focus on further weakness toward the mid-March lows under 1150.
 
"Technical signals are biased to further downside and are showing signs of acceleration."

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.

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