Gold News

Gold Prices Rise as London Silver Fix Gives 3 Months' Notice, Euro & GBP Prices Hit 5-Week Highs

GOLD PRICES peaked at 1-week highs near $1309 per ounce Wednesday lunchtime in London, rising with silver as news spread that the 117-year old London Silver Fix will cease in August.
Today's London Silver Fix was set at a 5-week high of $19.87 per ounce, more than 2.2% above Tuesday.
Silver then rose within 2 cents of $20.00 before easing back with gold prices, which edged down to $1305.
Having said it would leave just two other banks to meet for the daily Silver Fix – the global benchmark now running for 117 years in London – Deutsche Bank will delay its departure for 3 months until the entire process ends in mid-August.
Deutsche has been unable to sell its membership after announcing last month it would also quit the Gold Fix (now with 4 members) following pressure from German regulator BaFin and a raft of US class-action lawsuits claiming damages for "manipulation".
"Gold prices are stuck sideways, dips attract bargain hunting, but there is a lack of follow-through buying so the market remains vulnerable," says the latest Metal Matters monthly from bullion bank (and Silver Fixing member) Scotia Mocatta.
"While we remain bearish on gold prices," says a note from US investment bank Goldman Sachs, "escalating geopolitical tensions in Ukraine have offset stronger US macro data."
New US data said Wednesday that factory-gate prices rose much faster than analysts forecast last month, jumping 2.1% annually on the Producer Price Index.
Ten-year US bond yields still fell hard however, dropping 6 basis-points to the lowest level since October at 2.55%.
Tomorrow's official Consumer Price Index is expected to show US inflation at 2.0% per year.
The Euro meantime rallied but held near 5-week lows – some 2% beneath last Thursday's 2.5-year peak – as Reuters reported anonymous sources saying that a June rate cut is "a done deal" for the European Central Bank.
The ECB is "preparing a package of policy options" for policymakers to consider, claim the sources.
Gold prices for both Euro and Sterling investors today hit 5-week highs.
Bundesbank president, Jens Weidmann, was due to give a speech later on Wednesday, one day after the Wall Street Journal reported that the German central bank – a key block to looser monetary policy – is "willing" to back stimulus including QE-style asset purchases to boost lending to business.
Over in India – the former No.1 gold consumer nation, overtaken by China amid a ban on gold imports in 2013 – "We are hopeful that the new government will help us," the Economic Times quotes Prithviraj Kothari, vice president of the Indian Bullion & Jewellers Association, speaking about the BJP's likely defeat of the ruling Congress Party in this month's national elections ending Monday.
"We have asked for doing away with the 80:20 rule, which has reduced the availability of gold in the market. Consignments are not being cleared by customs authorities thus raising the premium making gold expensive."
India's premiums over the benchmark London gold price slipped last week to $100 per ounce, down from record peaks above $160 hit when the anti-import rules bit – and world prices fell to 3-year lows – in mid-2013.
Back in the UK meantime, the London Bullion Market Association said it has "launched a consultation in order to ensure the best way forward for a London silver daily price mechanism."
UK regulator the FCA said last month that the gold and silver benchmarks "exist for the benefit of the market," and it would "step in" if too few banks were left at those daily events to seek a single market-clearing price.

Adrian Ash

Adrian Ash, BullionVault Gold News

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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