Gold News

Gold Prices Shrug Off Asian Selling as Dollar Drops, Stocks Surge with Commodities

GOLD PRICES popped back to $1315 per ounce Thursday lunchtime in London's wholesale market as new US jobs data saw the Dollar drop and world stock markets rise yet again.
 
New claims for US jobless benefits rose last week, defying analyst forecasts. But ahead of Friday's official jobs estimate for December, the private-sector ADP report said the world's No.1 economy added more jobs than expected last month, with payrolls expanding the most in 9 months.
 
Silver tracked gold prices higher again to test $17.20 per ounce for the third time in 3 days, while commodity prices extended what Bloomberg calls their best-ever run of daily gains and Asian and European stock markets also rose once more.
 
The Euro flirted with 3-year highs against the Dollar above $1.20, holding the gold price for Eurozone investors at €1090 per ounce, some 0.6% below yesterday's 6-week high.
 
The UK gold price in Pounds per ounce extended its straight-line rally from mid-December's 12-month low, trading above £971.
 
Chart of UK gold price in Pounds per ounce. Source: BullionVault
 
Thursday morning's Dollar-price benchmarking in London failed to rise from yesterday, ending gold's strongest run of back-to-back gains since its record run of February 2016.
 
But today's AM auction did find solid demand from wholesale players around $1313 per ounce, just $1 below Wednesday morning's LBMA Gold Price.
 
That was in marked contrast to the heavy selling interest around $1317 at Wednesday afternoon's auction, which then found a balance with demand at $1314.90 – the highest London benchmark price since 15 September.
 
"[After] Chinese banks quickly sold into [Wednesday]'s strength," says a trading note from Swiss refiners MKS Pamp's Asian desk, "further liquidation was seen today for gold as speculators and Chinese traders continued to sell.
 
"Platinum, which was the best performer overnight, was under a lot of pressure from Japanese specs, who were eager sellers given the significant rise over the past week while they have been out [for New Year]."
 
Against the US Dollar platinum fell 1.5% overnight from yesterday's spike to mid-September highs just below $960 per ounce, before recovering that drop in London trade Thursday.
 
Japan's Nikkei stock index meantime leapt 3.3% on its first trading day of 2018, reaching its highest level since 1992.
 
"Unlike snow, Japan's deflationary mindset won't melt easily," said Bank of Japan chief Haruhiko Kuroda in Tokyo today, vowing to maintain "patiently" the central bank's unprecedented QE asset-purchase program.
 
Federal Reserve officials also worried last month "that inflation might stay below [their 2.0% annual] objective for longer than they currently expected," according to minutes from the US central bank's December meeting released yesterday.
 
Choosing to raise Dollar rates to a decade high of 1.5% however, "most participants" said that President Trump's tax reform bill was "a factor that led them to boost their projections of real GDP growth over the next couple of years."
 
"Strong corporate appetite for US Dollars at the end of the year usually means reduced demand for gold," says analysis of commodity positioning by French investment bank Societe Generale, yet speculators grew their bullish betting on gold derivatives in late-December.
 
"Going forward," the note adds, "geopolitical unrest in Iran could continue to provide some support to gold prices in the near term."
 
Iran today accused US President Trump of "grotesque...absurd" interference by tweeting support for the anti-government protests which have now seen 21 killed and been met with arrests and pro-government rallies.
 
Turkey's Foreign Ministry also attacked the US after a New York court found ex-banker Hakan Atilla guilty on 5 counts of helping Iran evade sanctions over its nuclear program using smuggled gold and illegal payments in a trial where one prosecution witness implicated Turkish president Recep Tayyip Erdoğan in the plot.
 
Trump's political colleagues at home meantime defended his Twitter attack on sacked PR guru Steve Bannon, accused by the President of having "lost his mind" after claiming in a new book that meetings between Team Trump and Russian officials amounted to "treason".

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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