Gold News

Gold Halves Last Week's Rise, "Bearish Shooting Star Doji" Seen with Silver as Stocks Shrugs Off Iraq Crisis

GOLD PRICES fell for a second day in London Tuesday morning, dropping to $1262 and halving last week's 1.9% gain as world stock markets ticked higher – and crude oil slipped – despite fresh advances by militant Islamists in Iraq.
 
US president Obama said Washington will work with Iran against the ISIS insurgents, but not "co-ordinate" military action.
 
The UK government said it's planning to re-open its embassy in Tehran.
 
"Should the situation in Iraq accelerate dramatically," says precious metals analyst Joni Teves at Swiss bank UBS' Joni Teves, "supply risks and consequent rising oil prices could potentially have an adverse effect on the global economic recovery."
 
"Gold's correlation with oil has strengthened of late," she adds.
 
But "when gold is driven by geopolitical news," Reuters quotes Australia's Macquarie Bank analyst Matthew Turner, "there's a tendency that this has to keep getting worse for gold to improve.
 
"If news stabilises, gold prices tend to fall back."
 
Both gold and silver prices now show "a bearish shooting star doji" after spiking but falling back to end Monday unchanged, says the latest technical note from Canada's ScotiaBank, owner of London market maker Scotia Mocatta.
 
"Momentum indicators remain tepidly bullish" in gold prices, says Scotia, while silver's relative strength indicator "provides for further upside potential...[to] a break of 
$20.00 [per ounce]."
 
Commodities across the board will suffer from a stronger US Dollar, says a new research report from French bank and market maker Societe Generale, but gold bullion in particular will be hit by rising real yields – after accounting for today's low inflation rates – on major government bonds.
 
With the US Federal Reserve meeting today and Wednesday, the IMF's downgraded US growth forecast for 2014 from 2.8% to 2.0% "would be bullion supportive" says bullion bank HSBC's analyst James Steel, if the market shifts from expecting a rate hike as early as mid-2015.
 
US consumer price inflation was today pegged at 2.1% per year in May, just above analyst forecasts of 2.0%.
 
Exchange-traded trust funds shed gold for the first time in 2 weeks on Monday, dropping over 4 tonnes from the giant SPDR (NYSEARCA:GLD) to take global ETF holdings to a new 4.5-year low overall by weight.
 
Platinum and palladium prices fell again Tuesday, hitting 1-month lows, as South Africa's AMCU union agreed the broad details of a wage offer from the world's 3 largest PGM-group metals miners, aimed at ending the 5-month strike.

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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