Gold News

Gold Price 'Under Pressure' Before Fed Minutes, 2016 Uptrend 'Over'

GOLD PRICE losses of 0.5% for the week were reversed Wednesday lunc htime in London, with the metal rallying in a tight range as world stock markets extended yesterday's 1.2% loss in New York.
 
Silver also rallied from a drop to 3-session lows as the gold price bounced to $1255 per ounce, but the white metal struggled to regain $17.50 per ounce.
 
Government bond prices also slipped, as did commodities, with minutes due out later on Wednesday from the US Federal Reserve's September policy meeting, when the Fed voted 7-3 to hold rates at a ceiling of 0.5% for the ninth month running after finally raising from zero after 7 years in December 2015.
 
Dissenting voter Esther George, president of the Kansas Fed, was due to give a speech as New York markets opened.
 
"We don't conduct monetary policy with any eye to political outcomes," said New York Fed president and voting member William Dudley when asked about November's presidential election this morning.
 
US Fed member Lael Brainard "is being spoken of as... Treasury secretary in a Hillary Clinton administration" reports the Financial Times.
 
"Very dull markets in precious at the moment," says David Govett at brokers Marex Spectron in London, "[but] I suspect that the [Fed] minutes will just reinforce the probability of a December rise.
 
"We may see some [further] pressure on the precious complex later."
 
"This year's uptrend is over," says a note from Dutch bank ABN Amro's precious metals and FX analyst Georgette Boele, pointing to gold's failure to hold its 200-day moving average and cutting her end-2016 gold price forecast by almost 10% to $1200 per ounce with a further fall to $1150 now forecast for 2017.
 
"We have revised downwards our gold price forecast because we think that investors will continue to liquidate."
 
Gold bullion holdings for exchange-traded trust funds – an increasingly favored vehicle for fund managers so far this year – held steady Wednesday, with the giant SPDR Gold Trust (NYSEArca:GLD) retaining October's 1.2% growth to date against the gold price's 5% fall.
 
Shanghai trading volumes eased further overnight, with the premium in China – the world's No.1 miner, importer, consumer and central-bank buyer – falling to $3.35 per ounce over London quotes at the city's afternoon benchmark fix.
 
One third above the Shanghai Fix's historical average incentive to importers, that was the lowest since late September, before last week's long National Day vacation.
 
Chinese bullion and jewelry shops have "slashed" gold prices since the end of Golden Week, the China Daily reported on Tuesday, reflecting both the $50 per ounce drop in world prices from before the holidays but also to counter how " people are less interested in purchasing gold bullion as an investment product," according to one Beijing retailer.
 
Gold imports to India – the former No.1 consumer, with zero domestic mine output – meantime sank almost 60% year-to-date compared with January-September 2015 says chambers of commerce group Assocham.
 
"Going forward, the festive demand [due with Diwali at end-October] will get a further push from the wedding season...the main contributor to gold consumption in India," says Assocham in a new paper.

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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