Gold News

Gold Prices Rise as Russia Cuts Ukraine Gas, Iraq "Spurs Short-Covering"

GOLD PRICES rose to near 3-week highs in Asia trade Monday morning, easing back in London as European stock markets fell for the fourth session running.
 
Touching almost $1285 per ounce, gold prices held some 2% higher from this time last week.
 
Silver prices spiked 4.5% higher from Monday last week, touching 1-month highs at $19.88 per ounce before dropping back.
 
Natural gas prices for July delivery meantime leapt 6% in Europe after Russia's Gazprom said it has ceased exports to Ukraine for refusing to pay upfront.
 
Major government bond prices rose, nudging yields lower, as Sunni jihadi bandits seized new territory in Iraq.
 
Brent crude oil prices held above $112 per barrel.
 
"While the uncertainty and unrest remains, one certainly doesn't want to be short," Bloomberg quotes Marex Spectron's London precious metals head David Govett.
 
Yet data from US regulators the CFTC showed Friday that speculative traders cut their bullish betting on gold futures and options for the fifth week running in the week to last Tuesday – just before the ISIS advances made headlines on Wednesday.
 
Looking at open interest in silver futures – meaning the total number of contracts open – Japanese trading house Mitsui's Singapore desk notes that it expanded again in the middle of last week.
 
That "impl[ies] the second leg from $19 onwards was more about spec[ulative] longs adding," it says. "[Perhaps the] real short covering hasn't been triggered?"
 
"Gold looks to be creeping back towards the $1287 level," says Jonathan Butler at Japanese conglomerate Mitsubishi, "the 50% retracement of the January to March uptrend."
 
Gold prices "could once again become stuck in a range" however, as the metal "oscillates between safe haven buying and more negative sentiment in the light of this week's expected further cut to US economic [QE] stimulus" from the Federal Reserve.
 
The Fed's decision will be followed Wednesday by a press conference – the last until after Labor Day marks the end of the summer holidays in September.
 
"Immediate resistance is seen at $1286/87," agrees technical analysis from London bullion market-maker Societe Generale. "A break above will propel gold prices towards $1300...then $1315/1331."
 
The Euro meantime fell Monday towards 2014 lows vs. the Dollar after the weakest May reading for inflation in the currency union's history at 0.5% annually.
 
That drove the gold price in Euros to recover the last of late-May's 4% drop, spiking just shy of €950 per ounce.

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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