Gold News

Gold Price 'Technically Challenged' as Dollar Hits Euro, Opec Hits Oil, Shanghai Delays Benchmark Fix

GOLD PRICES slipped back again in London on Thursday, halving last week's 2.6% gain to trade just above $1071 per ounce as stock markets from China to Europe fell once more but US equities opened higher.
 
Crude oil slipped again to fresh 7-year lows following news that members nations in the Opec oil cartel pumped a 6-year record quantity last month, while the US Dollar pushed the Euro back down from new 1-month highs above $1.10 ahead of next week's Federal Reserve interest-rate decision, now given 85% odds of a rise from zero by betting in the futures market.
 
The Euro's retreat saw the gold price for French, German, Italian and other single-currency investors rally0.5% from near 2015 lows beneath €973 per ounce.
 
Gold priced in British Pounds meantime erased most of last week's 2.1% jump as Sterling quickly regained a half-cent drop from new 3-week highs on the FX market, even as the Bank of England kept its key interest rate at 0.5% for the 82nd month in a row on an 8-to-1 vote.
 
"Decent physical demand appeared at [last week's new 6-year low of] $1050," says one bullion bank sales desk in a note, but "technically, the chart is challenging."
 
On the contrary, claims another bullion bank – Scotia Mocatta – in its daily technical analysis of gold price charts, "the metal continues to consolidate above short-term support of $1066 and above cycle low of $1051.
 
"The formation is shaping into a [bullish] 'Inverted Head and Shoulders'. The neckline comes in at $1088 but we don’t see larger buying until we break out of the 1-month top of $1093."
 
Demand to buy gold bullion at the LBMA Gold Price auction – the formally-regulated benchmark used to price deals and inventory worldwide – was tepid at 1.7 tonnes this morning in London.
 
Barely 60% of the Q3 average, that equaled less than 45% of Tuesday afternoon's demand, when the benchmark – formerly known as the "London Gold Fix" for over a century – found a clearing price 10 cents higher at $1072.10 per ounce.
 
China's long-rumored gold-price benchmark in Yuan will be delayed until April, Reuters reported today, saying that a proposed "fixing" at the Shanghai Gold Exchange – the only legal route for bullion to enter private-sector circulation in China – will then "start with Chinese and some foreign banks. Jewellers, miners and banks could use this price as a benchmark."
 
With China now the world's No.1 gold mining nation since 2007, and vying with India as the No.1 consumer market since 2012, a Yuan price benchmark had been rumored around this autumn's appointment as SGE chairman of Jiao Jinpu, formerly director-general of the Financial Consumer Protection Department at Beijing's central bank and financial regulator, the People's Bank of China.
 
Turnover in the Shanghai Gold Exchange's main contract meantime rebounded Thursday from yesterday's 1-week low, reaching above 29 tonnes to beat December's daily average so far but lagging Monday's 4-month record by more than 50%.
 
Shanghai premiums above comparable London quotes slipped below $3 per ounce, reducing the incentive to import metal.
 
London vaults saw a net inflows of gold bullion for the first time since June in October, new trade data suggested Thursday, with UK gold imports outweighing exports by around 3 tonnes – worth some £81 million ($125m) – as gold prices rallied at their fastest pace since January, gaining over 3% for the month.

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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