Gold Price Falls into Thanksgiving as Comex Bets Shrink with GLD ETF
Thursday, 11/23/2023 14:23
GOLD PRICES dropped Thursday, trying but failing to retake the $2000 level as the US Thanksgiving holiday left global stock markets edging higher amid less-awful-than-expected Eurozone economic data.
The Dollar price of gold has either fallen or held flat from a week earlier at each of the last five Thanksgiving holidays, averaging a drop of 1.7% from 2018 to 2022.
Thanksgiving 2023 is currently bucking that trend, with the Dollar gold price rising 0.6% so far from last weekend.
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Ahead of today's US holiday, giant gold ETF the GLD shrank by 0.1% on Wednesday, its first net liquidation by shareholders in more than 2 weeks.
No.2
gold ETF the IAU also shrank by 0.1%, reaching its smallest size since April 2020, while the giant silver-backed SLV ETF lost 0.1% of its shares in issue after growing to the largest size so far this month.
Over 5,000 Comex gold futures contracts were meanwhile closed out Wednesday, equal to 1.1% of open interest and the sharpest liquidation since Friday 10 November saw gold prices drop over $50 per ounce from the weekend before as the US Fed, the European Central Bank and the Bank of England all
vowed to keep interest rates 'higher for longer' to push down the pace of inflation.
With the US stock and bond markets shut for Thanksgiving, gold prices fell back to $1992 per Troy ounce in London today after rising Tuesday to
3-week highs at $2007 on "simply not much news".
The more industrial precious metals also edged back, extending the
record-run of platinum's $1000 discounts to the gold price per ounce as silver prices traded 2.1% below last Friday's 10-week highs above $24 per Troy ounce.
"Absent any fresh influences, I still don't think that gold has the momentum to maintain prices much above $2000 for the rest of the year," says analyst Rhona O'Connell at brokerage StoneX, quoted by Reuters.
"Underlying forces are still supportive for the longer term – geopolitics, especially the Middle East and the probability of further banking stresses in the States and elsewhere – but unless either or both of these escalate, we are likely to see prices drift."
Betting on a rate rise from the US Federal Reserve in December or January has now risen from 0% a week ago to 5% and nearly 10% respectively, according to the CME derivatives exchange's
FedWatch tool.
The market-priced odds of a rate cut then coming in May or earlier has meantime fallen from 2-in-3 to a little over 1-in-2, with the likelihood for the Fed cutting in or before June dropping from 86% last Thursday to 75% today.
Minutes from the European Central Bank's October meeting, when it kept the 20-nation Eurozone's key interest rates at currency-union record highs,
today showed policymakers anxious to stress 'higher for longer' despite their "no change" decision, agreeing that it was "important for the Governing Council to avoid an unwarranted loosening of financial conditions" from lower yields in the bond market.
Edging higher on Thursday, 10-year German Bund yields have still fallen by 0.25 points since the ECB's decision, while Italy's 10-year borrowing costs have dropped by almost 0.6 points.
The multi-month contraction in manufacturing and services sector activity across the Eurozone has slowed so far this month, preliminary PMI survey data said this morning, while services in the UK have stopped shrinking on the S&P/CIPS measure.
Gold prices in UK Pounds today fell back to £1589 per Troy ounce, while the Euro price of bullion slipped back below €1830.
Yesterday's data releases said that, despite US durable goods orders in October showing close to the
steepest month-on-month drop since the Covid Crash of spring 2020, consumer sentiment has now risen on the University of Michigan's monthly survey, while the latest weekly jobless benefit claims edged back.
Washington's borrowing cost for 10-year debt closed Wednesday at 4.42% per annum, sharply above the 3.05% yield seen last Thanksgiving and dramatically above the 1.64% one year earlier or the record-low Thanksgiving level of 0.98% seen in 2020.
Crude oil meantime fell Thursday, dropping near 1-week lows beneath $81 per barrel of European benchmark Brent, after yesterday's US data said crude inventories in the world's largest economy leapt last week, outpacing analyst forecasts almost 8-fold on weaker demand.
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