Gold News

Gold Prices Unmoved in 3 Weeks, 'Supported by ETF Investing' as India Stays Shut

GOLD PRICES edged higher against a weakening US Dollar in Asian and London hours on Thursday, rising 1.8% from last week's finish as world stock markets held unchanged in quiet trade.
 
Major government bonds held also flat overall, as did commodities.
 
Silver edged up towards $15 per ounce for the third day this week.
 
Gold's rally, says a note from Dutch bank ABN Amro, has " pushed aside headwinds such as...a higher probability of a Fed rate hike in June, and a rebound in the US Dollar, highlighting the strong upward momentum in gold prices."
 
Gold prices first reached today's US Dollar peak of $1245 per ounce 3 weeks ago, trading in a tightening range since then.
 
ABN that day called gold's price movement a "change in trend", switching its outlook to bullish the following week having been "long-standing bears".
 
"The momentum for gold ETFs continues to underpin the spot price," says refining and finance group MKS, "[and] with fresh inflows yesterday...the influx [is] not looking to slow anytime soon."
 
Rising for the 3rd session running on Wednesday, shares in bullion-tracker the SPDR Gold Trust (NYSEArca:GLD) saw investor demand expand once more, taking the quantity of gold needed to back the ETF's stock to the largest level since September 2014 at 788 tonnes – a 5-year low when reached in April that year.
Chart of SPDR Gold Trust (NYSEArca:GLD) tonnes
 
The largest silver-backed trust fund also saw demand for its stock grow Wednesday, but against falling prices, with silver recording a 1-month low at Wednesday's benchmarking auction in London of $14.82 per ounce.
 
The quantity of bullion needed to back the iShares' Silver Trust (NYSEArca:SLV) yesterday reached its largest level in 8 weeks at 9,777 tonnes.
 
Meantime in India – the largest household-consumer market for gold – jewelry and bullion outlets "are shuttered," reports Bloomberg from Mumbai, with retailers and manufacturers striking in protest at Monday's announcement of gold tax and duty hikes in the 2016 Budget.
 
A nation-wide strike in 2012 "was successful", Bloomberg says, in preventing the then-government from imposing an excise duty at the point of sale.
 
But the current BJP administration of Narendra Modi – elected in 2014 on a pro-business platform – has now imposed a 1% levy, and "[won't] be in a hurry to roll back the excise tax as it will be blocking a source of revenue," the newswire quotes brokerage Inditrade's head of FX and commodities Harish Galipelli in Hyderabad.
 
Indian gold prices last week fell as low as a $50 per ounce discount to international quotes, thanks to a glut of imported metal and a lack of demand ahead of the Budget, which had been expected to reduce duty, not raise it.
 
Gold prices in China meantime reversed most of yesterday's 0.9% drop on the Shanghai Gold Exchange, nearing 12-month highs against the Yuan but cutting the premium above international Dollar quotes below 30 cents per ounce – just one-eighth of the incentive typically offered to Chinese importers.
 
Trading volumes in Shanghai's main gold contract slipped to a 6-session low, but held two-thirds stronger than the daily average of the last 18 months.
 
Gold priced in Euros today held around €1140 per ounce – the new 10-month high reached on Monday – as the single currency edged higher versus the Dollar following stronger-than-expected retail sales data for the 19-nation monetary union plus a rise in jobless benefit claims reported by the US.

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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