Gold News

Gold +$25 Near Record Weekly Close as US-UK Strike Houthis, Oil Jumps

The PRICE of GOLD ended London trade Friday close to a record-high weekly finish as crude oil jumped but interest-rate expectations fell after US and UK military forces hit 16 sites in Houthi-controlled Yemen, killing 5 fighters, in a bid to stem the Iran-backed group's attacks on shipping in the Red Sea.
Called "limited [and] self-defense" by British Prime Minister Rishi Sunak in London, the Middle East air-strikes were condemned as "disproportionate" by Nato partner Turkey's President Recep Tayyip Erdoğan.
"It is as if they aspire to turn the Red Sea into a bloodbath."
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The theocratic regime in Iran, which funds, trains and supplies the Houthi forces in their war against Yemen's Saudi-backed former Government, called the US-UK strikes “an arbitrary action, a clear violation of the sovereignty and territorial integrity of Yemen, and a violation of international laws and regulations."
But while oil prices rose over 4% to reach 2-week highs above $80 per barrel of Brent crude on news of the US-led attack on the Houthis' military sites, forecasts for US Fed and other major-market interest rates fell after new US and Chinese inflation data came in below expectations.
Wholesale bullion for London settlement fixed around $2056 per Troy ounce – over $25 above yesterday's spike to 4-week lows after stronger-than-expected US cost of living data, matching last Friday's 3pm benchmark, and barely 0.3% below end-2023's record-high weekly gold close.
Chart of USO oil ETF price vs. GLD gold ETF, last 5 years. Source: Google Finance
With the first US Bitcoin ETFs approved and launched Thursday, bullion-backed ETFs saw further investor selling, putting the giant GLD and IAU gold products on track for a 2nd and 3rd consecutive weekly outflow respectively while silver's giant SLV headed for its 4th week of liquidation.
Silver prices on Friday also rose back to last weekend's level, adding 90 cents per Troy ounce from yesterday's 8-week low of $22.48, hit after US consumer-price inflation came in stronger than analysts expected for December.
The People's Liberation Army in China meantime said it is "on high vigilance...and will... resolutely crush any form of secessionist designs for 'Taiwan independence'" as the island nation goes to the polls this weekend.
Latest opinion surveys – last published 10 days ago owing to Taiwan's election rules – showed the ruling and pro-independence DPP slightly ahead of pro-unification party the KMT, but "domestic issues are at the forefront of [this] tight race" according to local pollsters.
New data from China today said the world's 2nd largest economy and No.1 manufacturing nation saw the cost of living fall in December for the 3rd month running on an annual basis, the longest stretch since the global financial crash and recession of 2009.
Chinese producer prices also fell more steeply than expected, while bank lending rallied less than analysts forecast but exports rose faster than imports, boosting the country's trade balance with the rest of the world but still marking the weakest December surplus since 2019.
US producer prices fell for the 3rd month running in December, the Bureau of Labor Statistics said Friday, capping the full-year change at 0.9%, down from 2021's multi-decade record above 10% inflation and the weakest annual price-rise since the Covid shutdowns and recession of 2020.
Betting that the Fed will cut its key interest rates at this month's policy meeting rose to 6.7% of all positions, the highest since New Year according to data from the CME derivatives exchange.
Betting on a cut at the Fed's following meeting in March meantime jumped above 4-in-5, twice as strong as this time last month, while the market's forecast for end-2024 rates dropped back to 3.75%, matching the 'euphoric' bets of Christmas Week.
That would require 6 cuts of 0.25 points each from today's 2-decade high in the Fed Funds rate.
The Fed itself last month forecast just 3 cuts for 2024.
"[Washington and London showed] total disregard for international law in the name of escalating the situation in the region for their own destructive purposes," said a spokeswoman for the Foreign Ministry of Russia – now the world's 5th largest bullion-owning sovereign nation on official central-bank gold holdings data, and now entering the 24th month of its all-out invasion of neighboring Ukraine, where at least 4 civilians were killed in continued fighting today.
The Government of Israel meanwhile gave its defense today against South Africa's charge of "genocide" in prosecuting its war on Hamas in Gaza, laid at the International Court of Justice in The Hague.
Gold in Euro terms rose to 1-week highs Friday above €1873 per Troy ounce, while the UK gold price touched £1614, also 2.1% above yesterday's multi-week lows.

Adrian Ash

Adrian Ash, BullionVault Gold News

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.

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