Gold News

Gold Prices End 9-Day Surge, "Year of Consumer" Saw US Jewelry Demand Rise 1st Time Since 2001

GOLD PRICES slipped Tuesday in Asia and London, dropping $20 from yesterday's new 3-month high to trade at $1313 per ounce.
 
Ending a 9-day run of higher prices, an event only seen 10 times in the last 40 years, gold prices then rallied just below last week's closing level of $1318.
 
Silver also fell, doubling gold's 1.5% drop before also rebounding to trade just shy of last week's finish at $21.50 per ounce.
 
China's central bank today drained $8bn from money markets, the first such move since June, as interest rates fell to what analysts called "unusual" low levels.
 
Shanghai premiums to the world gold price today edged down to $4 per ounce from $7 Monday.
 
The Bank of Japan meantime held its key interest rate at zero, and continued with its QE money printing program, whilst also extending two bank lending schemes.
 
Japanese shares jumped more than 3%, but European markets held flat.
 
The Pound retreated from Monday's 3.5-year highs to the Dollar after new data showed UK inflation falling below the Bank of England's 2.0% annual target for the first time in four years in January.
 
"Demand for gold in China [in 2013] set a remarkable new record of 1,065.8 tonnes," says today's new Gold Demand Trends report from market-development organization the World Gold Council, "exceeding our expectations for the year."
 
Indian gold demand was also "resilient", it says, estimating a possible 200 tonnes of "unofficial imports".
 
With politicians now debating an easing of India's gold import restrictions, that level of smuggling would add $9 billion to the government's current-account deficit forecast of $45bn for this fiscal year.
 
"The unprecedented flow of gold from western vaults to eastern [consumer] markets," says the report, "was a function of large-scale selling of more tactical ETF positions among western investors as macro sentiment in the US improved."
 
Calling 2013 the "year of the gold consumer", the report notes that US and UK jewelry demand rose for the first time in 12 years.
 
2013 was also the first year the gold price fell since 2001.
 
Net-net, total world demand for gold fell 15% by weight from 2012, however. 
 
"Jewellery, bar and coin demand reached an all-time high," the World Gold Council says.

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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