Gold News

Gold Prices Touch $1300 Ahead of Ukraine Elections, But "Investment Appeal Waning" as GLD Shrinks, Palladium Hits 2011 Highs

GOLD PRICES rose through $1300 per ounce for the 7th time in the last month Thursday lunchtime in London, only to fall back as military leaders in Thailand – Asia's third-largest gold consumer – confirmed they seized power in a coup.
 
Ukraine troops meantimee suffered their worst casualties yet in a separatist attack, with 10 soldiers reported dead ahead of this weekend's national elections.
 
Moscow TV today showed footage of Russian troops apparently moving away from the Ukraine border.
 
Former Russian oil tycoon and political prisoner Mikhail Khordorkovsky yesterday urged Western politicians to avoid further sanctions against President Putin's leadership, warning they risked worsening Russian nationalism over what is a "slow burn civil war" in Ukraine.
 
Silver spiked Thursday with gold prices, briefly touching a 1-week high of its own at $19.80 per ounce.
 
World stock markets meantime failed to follow Wall Street higher after minutes from the latest US Federal Reserve meeting said policymakers reviewed "options for normalization" of interest rates from their current 0% level, but again saw mid-2015 as the earliest likely date.
 
Industrial precious metals platinum and palladium today hit 8-month and 3-year highs respectively as South African producer Implats said the current 17-week strike over wages "could go on for much longer."
 
Fellow platinum miner Lonmin said Monday it has now lost one-third of output to the dispute, which today saw a National Union of Mineworkers member stabbed to death after breaking a picketline of the rival AMCU.
 
"[Wednesday] was 'Ground Hog' day" in gold prices, says Australian bank ANZ in a note, "with little conviction again on market direction."
 
"The metal continues to technically consolidate," says Swiss refining and finance group MKS's Singapore team."
 
"We wonder if the gold price's increasingly compressed trading range is a 'pennant' formation," says US brokerage INTL FCStone, "signifying an impending move.
 
"Gold prices should gain more direction – one way or another – once the Ukrainian elections are over," it concludes.
 
Commodity prices ticked 0.4% higher as US bond yields also rose amid what one dealer called "a bit of profit taking" after the Fed minutes.
 
But "the yellow metal is losing its appeal as an alternative investment given the prospects of low inflation," reckons the commodities desk at Commerzbank in Frankfurt.
 
The volume of palladium held for investment in exchange-traded trust funds this week reached new records above half-a-million ounces.
 
Gold investment holdings in the largest ETF, the SPDR Trust (NYSEARCA:GLD) fell Wednesday to new 5.5-year lows, down more than 40% from the peak of end-2012.
 
Leading refiner Johnson Matthey said this week it expects 2014 palladium mine output to fall to 5.5 million ounces, creating a 1.2moz shortfall to demand.
 
Palladium is primarily used in auto-catalysts.

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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