Gold News

Gold Price Falls, Sinks vs UK Pound Despite N.Korea Missile, London Bomb + Spain's Catalonia Crisis

GOLD PRICE gains of 1.6% from last week were again erased Friday in London, as the outlook for interest-rate hikes trumped new geopolitical tensions led by another weapons test by the pariah state of North Korea.
 
Dollar priced-gold retreated to $1325 per ounce – more than $30 below last Friday's 12-month high – as major government bond prices fell yet again, driving US Treasury bond yields up to their highest since mid-August above 2.20% on 10-year debt.
 
After threatening to "sink" Japan and turn the US "into ashes and darkness" on Thursday, Pyongyang this morning fired its furthest-yet missile test over the northern Japanese island of Hokkaido, splashing into the Pacific.
 
British police said an 'improved explosive device' caused an explosion on a rush-hour London Tube train, with 22 people needing hospital treatment, mostly for burns.
 
Spain's finance ministry meantime won a court order to take control of financial payments by the regional government in Catalonia, where a referendum on independence – deemed "illegal" by Madrid – is scheduled for 1 October.
 
Yesterday saw Madrid threaten local mayors in the would-be breakaway region with jail if they assist with the vote.
 
"Today's trading has been surprisingly uneventful given the news from North Korea this morning," says a trading note from Swiss refining and finance group MKS Pamp's Asian team.
 
Most notably, "the SGE premium has pulled back a little from yesterday," MKS says of benchmark Chinese prices, "to trade between $2-4 over loco London prompting some selling out of China" – the world's No.1 mining, consumer and importing nation."
 
The UK gold price in Pounds per ounce meantime slid to a 5-week low Friday, down almost 6% from last week's 10-month high as Sterling continued its rally after the Bank of England yesterday hinted it may need to raise its key rate – now at a all-time record lows of 0.25% – "by a somewhat greater extent...than current market expectations."
 
Chart of the UK gold price in Pounds per ounce. Source: BullionVault
Since late-August the Pound has now jumped 6.4% against the Dollar, recovering levels last seen on 24 June 2016 – the day of the UK's shock Brexit referendum result – at $1.36.
 
Today's jump in Sterling saw London's stockmarket fall for the 4th day running, with the FTSE100 index of primarily international businesses losing 1.2% as other European equities held flat.
 
Trading in US interest-rate futures now puts a near-99% certainty on the Fed holding unchanged next week, but betting on a November hike has risen from zero to 4% over the last week, and betting on the end of 2017 now sees a 53% chance of rates being higher than now – up from barely 30% at the start of this month according to the CME's FedWatch tool.
 
The gold price in Euro terms also fell to 2-week lows on Friday, dropping back to €1106 per ounce, a new low for September so far.

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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