Gold Recovers from 6-Day Drop as Crude Oil Above $50 for 1st Time Since November

GOLD BULLION rebounded from its lowest level in seven weeks to $1228.90 per ounce in London trade Thursday, writes Atsuko Whitehouse at BullionVault.

Brent crude oil meantime climbed above $50 per barrel in early Asian trading – the highest price since November 2015 – following a US report which showed a decline in crude inventories and which also helped lift energy and materials stocks.

US stocks advanced for a second straight session yesterday, with the S&P 500 posting its highest close in nearly a month.

The Dollar index was down to 95.170 after hitting a fresh multi-week high of 95.61 on renewed expectations of an earlier -than-expected interest rate hike in the US.

Yesterday, Bloomberg reported Philadelphia FRB Governor Patrick T Harker said he expected two or three rate increases in 2016 as did San Francisco Fed President John Williams on Monday.

Federal Reserve Board Governor Jerome Powell is due to speak today at 1615 GMT and Federal Reserve Chair Janet Yellen tomorrow at 1715 GMT.

IMF’s data revealed that Russia added 16.24 tonnes of gold to its official reserves in April, bringing total holdings to 1,476.7 tonnes. China also added 10.9 tonnes to its reserves, bringing the total to 1,808 tonnes.  Venezuela however sold 34.2 tonnes of gold in February and another 8.5 tonnes in March.  In the first quarter of 2016 Venezuela has sold $1.7 billion of precious metals to repay their debts. 

China's new benchmark Shanghai Gold Price today showed a premium to London wholesale prices at Dollar equivalent price of some $2.51.

The SPDR Gold Trust (NYSEArca:GLD) the world's largest exchange-traded gold-backed trust fund was unchanged at 868.66 tonnes on Wednesday after losing 3.9 tonnes on the previous day.  Its holdings, however, have increased 14 times in the last 22 trading days.

Today Japanese Prime Minister Shinzo Abe presented documents to his fellow Group of Seven leaders.  He said they indicated a risk of the world economy falling into a crisis on the scale of the 2008 Lehman shock, unless appropriate policy measures were taken.

The G7 leaders did agree on the need for flexible spending to spur world growth but the timing and amount depended on each country, Deputy Chief Cabinet Secretary Hiroshige Seko told reporters, adding some countries saw no need for such spending.

Britain and Germany have been resisting calls for fiscal stimulus.