Gold News

Gold Prices Flat, "Consolidating" at 200-Day Average After Fed's Yellen Vows to Keep Rates Low

GOLD PRICES held tight around $1300 per ounce again Thursday in London, following what analysts called "a very quiet day" despite US Fed chief Janet Yellen stressing that Dollar interest rates won't be raised from zero any time soon.
 
"Traders are lightening positions prior to Easter," says ANZ Bank in a note.
 
"The comments from Yellen should have lifted gold prices," says analyst Robin Bhar at Societe Generale, "but arguably the Dollar hasn't weakened as much."
 
"Gold prices have been evolving within a massive flat range since last June," says a separate technical analysis from the French investment and London bullion bank.
 
"Short-term, gold prices should find support at $1295/90."
 
Yesterday saw "consolidation from Tuesday's large selloff" says SocGen's fellow London market-maker Scotia Mocatta in its technical analysis.
 
"The 200-day moving average for gold prices comes in around the 1300 area [and] seems to be supportive.
 
"Turning higher over the past month," says Scotia, the gold price's 200-day average "explains why the market has been getting comfortable with the bullish outlook."
 
Crude oil and base metals were also flat Thursday, while silver held near $19.60.
 
European stockmarkets reversed earlier losses, but US and UK government bonds ticked down.
 
Over in China, Shanghai gold prices ended little changed in Yuan terms, closing the day equal to London quotes in Dollar terms after a 7-week period of discounts.
 
Following China's sub-target GDP data this week, some rural banks saw Beijing cut the "required reserves" level of cash which they must hold back, aiming to boost lending to agricultural industries and forcing short-term interest rates sharply lower.
 
Gold bullion in China – the world's heaviest private consumer in 2013 – is more usually priced at a premium to London thanks to local demand vs. supply, plus import costs.
 
Shanghai's most active spot gold contract has now traded $3 per ounce below world prices on average since the start of March. 
 
Here in London's bullion market today – closed for Easter from tonight until Tuesday – interest rates demanded by gold lenders reached new 8-month highs.
 
"Coupled with the expected tightening of US monetary policy," says today's new Gold Survey 2014 from Thomson Reuters GFMS, the market's leading consultancy, "an increased desire for gold [borrowing] may finally spark a more sustained upturn in leasing rates from their protracted period of ultra-low levels."

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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