Gold News

Gold Prices Hit 1-Month Dollar High, 16-Month Euro Peak, Traders Spy 'Inverse Link' with Stock Markets

GOLD PRICES hit 1-month highs for US investors overnight Monday, peaking at $1230 per ounce before slipping back as world stock markets rose.
 
Crude oil fell hard once again, and copper hit its lowest level since 2010.
 
US Treasury bonds and other major government debt prices held flat as Greece's borrowing costs eased back on the market and Eurozone equities rose more than 1.2%.
 
Gold prices in Euros reached new 16-month highs even as the single currency steadied on the FX market above last week's 9-year lows to the Dollar.
 
Dollar gold prices will average $1225 per ounce in 2015, some 4% below last year's average, according to a new forecast from Bank of America-Merrill Lynch.
 
BAML reckons that weak gold investor sentiment, gently higher real interest rates, and further gains in world stock markets will curb price gains.
 
But "sustained demand growth from emerging markets and lack of selling from investors in the world ex-China are supportive," the note adds.
 
"It would seem," says the London office of brokers Marex Spectron, "that there is money looking for a home at the beginning of the new year...happy to invest in precious metals."
 
"There is [also] still good physical demand out of Asia at lower numbers, keeping gold supported."
 
"Gold lost none of its shine in Asian trade today," says a trading note from Swiss refining and finance group MKS, pointing to the overnight spike above $1230 per ounce.
 
Gold prices in Shanghai closed Monday with a 1.3% gain vs. the Yuan on solid volumes, but trimmed China's key gold contract premium above London quotes to $3.80 per ounce.
 
The city's "free trade zone" gold contracts – launched in September to attract international traders – again saw very light action, with the main iAu9999 product drawing only 0.5% as much business as the main domestic contract.
 
To try and "encourage" more international clients, the Shanghai Gold Exchange has slashed a range of fees to zero for the first 6 months of this year.
 
Bloomberg reports that Dollar-bond holders of Hong Kong-based property developer Kaisa, feared to be in default on its debts,  still have not received interest payments due last week.
 
Meantime in former No.1 gold consumer India, Monday's price rise was attributed by dealers to solid "wedding season" demand.
 
"With a seasonally quiet period" ahead, however, "imports and premiums [above London prices] are likely to be subdued in the coming weeks," reckons the latest weekly analysis from Japanese conglomerate Mitsubishi, "denying a crucial source of support to the physical market."
 
"Further losses on most stock exchanges [have] helped the gold price continue its upward trend," reckons a note from Germany's Commerzbank.
 
"For the time being," agrees analyst Edward Meir at INTL FCStone in the US, "we won't likely see any change in the inverse relationship between gold and US equity markets."

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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