Gold News

Gold Prices Erase April Gains as US-Russia Sanctions Puzzle Analysts, "Data Back in Focus" Ahead of US Fed

GOLD PRICES slipped further Tuesday morning in London, dropping to 3-session lows and erasing the last of April's previous 3.7% gains as analysts disagreed over the impact of the latest US-Russian wrangling over Ukraine.
 
World stock markets rose while major government bonds fell, nudging interest rates higher ahead of tomorrow's statement from the US Federal Reserve – widely expected to see a further $10 billion tapered from the Fed's monthly QE asset purchase program, currently at $55bn.
 
Commodities held flat but silver matched and extended the drop in gold prices, falling 2.2% from last week's finish to bounce off $19.33 per ounce – also 2.2% down from the end of March.
 
"[Washington's] relatively mild rebuke seemed to unhinge some of the 'Russian-centric' commodities" on Monday, reckons one US brokerage in a note, pointing to the new US sanctions on named Russian politicians and businesses.
 
"Gold, platinum, nickel and aluminum all experienced sharp falls on Monday."
 
"The gold price continues to be driven by events in Russia and Ukraine," says Australia's ANZ Bank. 
 
"However, a lack of gold buying was evident on the announcement of the US imposing further sanctions on Russia, with gold selling off on the news."
 
On the contrary, says Germany's Commerzbank, "A larger than expected increase in pending home sales in the US pushed gold lower in New York trade" yesterday.
 
"The uncertainty regarding the situation in Russia continues to prevent any major sell-off from taking place," Commerzbank's commodity team believes.
 
Russian-based bank VTB on the other hand says gold prices and market participants "will be turning their attention back to macro headlines, with the all-important US jobs report in focus on Friday and manufacturing [activity] PMIs across the globe on Thursday."
 
Gold prices Tuesday fell less steeply in Shanghai, pushing China's most active gold contract to a premium over London quotes for only the third time in the last 3 weeks, albeit at just 40¢ per ounce.
 
London's gold lending market eased Tuesday, with borrowing costs slipping to 2-week lows.
 
The British Pound fell from new 4.5-year highs at $1.6850 after new data showed the UK economy growing 3.1% annualized in Q1, just shy of analyst forecasts.
 
Gold prices for Sterling investors dropped back through £770 per ounce, a level first reached on the way up this week in April 2010.

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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