Gold News

Gold Prices End Feb. 6.5% Up as US GDP Revised Down, UK's FCA "Likely" to Regulate London Fix

GOLD PRICES held in a tight range above $1330 per ounce Friday lunchtime in London, heading for their best monthly gain since July as new data showed the US economy expanding at a slower pace than first reported.
 
Revised GDP data for end-2013 showed the US economy growing 2.4% instead of 2.5% year-on-year.
 
The Federal Reserve's preferred measure of inflation, the PCE deflator, slowed to 1.5% rather than the 1.2% first estimated.
 
"In the weeks and months ahead," said new Fed chair Janet Yellen to the Senate Banking Committee Thursday, "my colleagues and I will be attentive to signals that indicate whether the recovery is progressing in line with our earlier expectations."
 
A possible "pause" in the Fed tapering its QE money-printing program, says a note from US brokerage INTL FC Stone, "is why we think gold has been fairly steady this year
 
"Investors are allowing for the possibility of a pause...Of course, the recent turmoil evident in a number of emerging market economies has also added additional impetus to gold's advance."
 
After gold crashed to 3-year lows of $1180 midsummer 2013, gold prices rallied 10.3% and then 6.1% over July and August.
 
Falling to that level again on New Year's Eve, gold has since risen 4.1% and 6.5% in January and February, peaking Monday at $1345 – some $85 per ounce below August's rebound top.
 
Shanghai gold prices edged higher overnight Friday, pushing the premium to London settlement to a 1-week high of $3.25 per ounce, even as the Chinese Yuan slipped to a new 6-month low on the currency market.
 
Chinese premiums to London gold prices went negative earlier this week for the first time since November, suggesting a surplus of supply over demand in the world's No.1 consumer nation.
 
The world's benchmark daily gold pricing, set at the London Fix, is now being targeted by class-action law-suit advisors, the Financial Times reported Monday – mistakenly adding that UK and German regulators are formally investigating the 100-year old auction process.
 
"It is likely that co-operation between participants may be occurring," says the author of another new but as yet unpublished study of the London Gold Fix, NYU Stern professor Rosa Abrantes-Metz – "a paid expert witness to lawyers helping companies and individuals sue banks," according to Bloomberg today.
 
UK regulator the FCA said Thursday, in updating its likely oversight of commodity markets, that "key changes [suggest] the provision of commodity benchmarks referenced in financial contracts will become a regulated activity."

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.

See the full archive of Adrian Ash articles on GoldNews.

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