Gold News

Gold Price 'Like Watching Dry Paint' with US Shut for Thanksgiving, India & China Demand at Issue

GOLD PRICES held flat in quiet London bullion trade Thursday, lagging a 2% rise from new multi-year lows in copper and platinum as European stock markets gained over 1%.
 
With US markets shut and US economic data suspended for Thanksgiving, "This isn't like watching paint dry," said one London bullion trader.
 
"It's like watching dry paint."
 
Gold moved in a tight $5 range around $1070, but silver was stronger, spiking 1.3% at lunchtime to hit a 1-week high of $14.39 before easing back to trade 8 cents higher for the week so far at $14.27 per ounce.
 
Major European bond prices rose, edging yields lower.
 
Following the downing of a Russian fighter jet near the Turkish-Syria border on Tuesday, Moscow meantime tightened controls on imports of food from Turkey, citing regulatory data.
 
Interest in the LBMA Gold Price auction – the twice-daily benchmarking process now regulated by UK authorities and administered by trading-exchange providers ICE – fell once more, dropping to one-fifth of the Q3 average as the afternoon run found a clearing price at $1071 per ounce.
 
"We remain mildly bullish on gold prices," Canada's Financial Post quotes bullion-bank and market-maker HSBC's analyst James Steel, "but the bounce has taken longer than we had anticipated.
 
"We believe that 2016 could see a more decisive recovery. Emerging market demand has already set a floor for gold prices, and we think buying from India and China is likely to increase."
 
Gold's price drop below $1080 saw "physical buying pick up notably," says Chinese-owned investment and bullion bank ICBC Standard Bank, as "Indian wholesalers started restocking and...Chinese importers saw the Shanghai-London arbitrage widen out to more than $5 per ounce for the first time since the summer.
 
"However, there are already signs that some of that opportunistic, price sensitive demand for bullion is easing off."
 
"The physical market is unlikely to offer sentiment support," adds HSBC's fellow bullion market maker Barclays, saying that "Chinese demand has been mediocre, while in India the government is actively reining in gold imports via policies such as the Gold Monetization Scheme."
 
India's key Q4 gold demand – capturing the peak Diwalia and wedding season – could hit the lowest level in 8 years, says a Reuters report, citing an estimate of 150-175 tonnes from , All India Gems & Jewellery Trade Federation director Bachhraj Bamalwa.
 
That would mark perhaps a drop of one-third from the half-decade average.
 
Following the poor launch of India's bid to "monetize" existing private gold holdings and use them to meet future demand, the sub-continent's wealthiest Hindu temple – Tirumala Tirupati Deveasthanams – said today its investment panel "will meet soon to take [a] decision" on joining the new scheme.
 
TTD said in August it already held 4.5 tonnes of gold on deposit with commercial banks, and was adding another tonne.
 
To date, the Gold Monetization Scheme has gathered less than half-a-kilo from the sub-continent's estimated 20,000 tonne private holdings.
 
Gold imports to China meantime retreated in October from a 10-month high, latest data show, dropping below 76 tonnes.
 
That still held year-to-date gold imports to China through Hong Kong at 99% of January-to-October 2014, recovering from spring 2015's earlier 25% year-on-year drop.
 
Separate customs data from Switzerland – the world's No.1 gold bar refining center – already show October was the strongest month in 7 for gold exports direct to the Chinese mainland, where gold is now being landed in Beijing and Shanghai.

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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