Gold News

Gold Price Holds $2000 Again as Inflation Slows, 'Political Skirmishes' Support

The GOLD PRICE fell back Thursday afternoon in London, cutting its near-$50 gains for the week so far to $20 per ounce at $2020 even as longer-term interest rates fell after new US data again pointed to inflation weakening further.
With 10-year US Treasury yields falling to the lowest in 5 weeks at 3.36%, Western stock markets also dropped after US Producer Price inflation came in at just 2.3% across the 12 months to April – the slowest pace since January 2021.
Separate data meantime said that new claims for US jobless benefits jumped last week – the highest since October 2021, tail-end of the Covid Crisis.
Trading at $2013 per ounce around this afternoon's London benchmarking auction, that put the Dollar gold price on track to match mid-April's record 6-day run above $2000 per ounce.
Chart of spot gold price in US Dollars. Source: BullionVault
"Gold continues to be supported by central bank buying, a reopening in China, geopolitical skirmishes and a quiet revival in gold ETF and [wholesale investment-market] demand," says the latest monthly price commentary from the mining industry's World Gold Council.
"But absent a strong catalyst, one can't rule out short-term pressures [on the gold price] including an analogue with the 2011 peak, a bounce in the US Dollar, and abating banking fears promoting further profit taking."
The Reserve Bank of India "ranks amongst the top gold buyers amongst central banks globally," says Fortune India magazine, "the RBI's affinity towards the yellow metal seems to be waning...[with] two consecutive quarters of low gold purchases."
Private-sector gold prices in China – the metal's No.1 consumer nation – today fell back below London quotes Thursday, showing a small discount and discouraging new imports of bullion for the 2nd time this week after an unbroken run of strong premiums since last June pointed to strong domestic demand.
The head of private Russian mercenary army Wagner meantime said that Ukraine's much-anticipated spring counter-offensive has begun, approaching his flanks around the devastated town of Bakhmut.
But Ukraine's President Zelensky said the offensive can't start until Western allies deliver more munitions and materiel, because "we'd lose a lot of people. I think that's unacceptable. So we need to wait."
Turkey's President Erdogan saw opinion polls ahead of Sunday's election swing towards opponent Kemal Kilicdaroglu after rival candidate Muharrem Ince quit the race, consolidating the anti-AKP vote.
Istanbul's BIST100 share index leapt over 7% on the news, trading 1/10th higher from last Friday's 6-month low, while the Lira stemmed its relentless dive to this morning's fresh all-time record lows versus the US Dollar – its 89th new daily low in 123 sessions so far in 2023.
Turkey's central bank has "verbally" asked FX dealers to worsen their prices for US Dollars against Lira, Bloomberg reports, with spreads at the Grand Bazaar reaching 7% in an attempt to stem the currency's plunge.  
While Germany's household gold demand sank in Q1, down by 72% from the same period in 2022, Turkey's leapt by 237% according to data compiled by specialist analysts Metals Focus for the World Gold Council.
That saw Turkey move into world No.3 position for gold jewelry, coin and bar demand combined, behind China and India but ahead of the USA and showing the widest margin over Germany since at least 2009 on the WGC's data series.
Meanwhile in the USA, "Our country is being destroyed by stupid people, by very stupid people," said ex-president Donald Trump overnight, speaking at a Republican hustings for the 2024 election and repeating his claim that the 2020 election was "rigged" while mocking the woman who yesterday won $5m in damages from him for battery and defamation.
With 'X-day' for a US debt default now likely to hit in early June unless the Republican Congress agrees a rise in the current $34 trillion debt ceiling with Democrat President Biden, "if they don't give you massive [spending] cuts, you're gonna have to do a default," said Trump, who in his business career has defaulted on his own corporate creditors 6 times.
"It could be really bad, it could be maybe nothing. Maybe it's a bad week, or a bad day, who knows?" he said of a US debt default, dubbed an "entirely-avoidable economic catastrophe" by the White House
"The closer you get to it, you will have panic," warned Jamie Dimon, CEO of US financial services giant J.P.Morgan today.
Gold's price spike in summer 2011 to then-record highs of $1920 came after credit-ratings agency S&P downgraded the US from triple-A despite Democrat President Obama's deal with Republican opponents raised the debt limit to $16 trillion to avert a technical default.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver, platinum and palladium 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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