Gold News

Gold Prices Spike to 3-Month High, "Chunky ETF Buying" Cited But Asian Traders Sell

GOLD PRICES began the back-half of 2014 spiking to 3-month highs overnight in Asian trade Tuesday, touching $1332 per ounce as the US Dollar fell on the currency market.
 
Easing back as world stock markets pushed higher, gold prices held below last week's multi-month highs for Eurozone and UK investors.
 
Silver followed the rally and dip in gold prices, but failed to set new 3-month highs by trading in a tight range between $21.04 and $21.15 per ounce.
 
Stronger gold prices so far this week "could partly be explained by chunky ETF buying yesterday," reckons Swiss investment and bullion bank UBS's precious metals analysts.
 
New York's SPDR Gold Trust (NYSEARCA:GLD) yesterday added 5.7 tonnes to the gold bullion held to back its shares, the largest 1-day addition since March.
 
That rise only took the exchange-traded fund's holdings back to April levels at 790 tonnes however – a four-year low when first hit this New Year.
 
Even so, the change in ETF flows is "significant" says UBS, and "is a key factor" supporting  gold prices. "Further liquidations cannot be ruled out with certainty," the note concludes, but would require "a very strong catalyst such as a sharp hawkish shift in Fed policy."
 
On a technical analysis of price charts, says fellow London market-maker Scotia Mocatta, "Gold appears to have made a decisive break above recent congestion around $1316."
 
"The March-to-June correction lower has ended," says Commerbank's technical analyst Axel Rudolph in Frankfurt, now pointing to the "triangle resistance line at $1370.29" coming down from the gold price's August 2013 and March 2014 peaks.
 
"With resistance at $1325 broken," agrees London brokerage Marex Spectron, "gold may attempt to test higher."
 
But should gold prices "get anywhere near the mid 1300s," however, "it's time to sell" their note says.
 
"Strong Asian selling" overnight capped " both gold and silver markets" says refining and finance group MKS's Singapore desk.
 
Shanghai Gold Exchange prices ended Tuesday at 11-week highs in the Yuan, but extended their discount to London quotes to $1.40 per ounce.
 
Further ahead, "Gold's recent gains are unlikely to last," reckons UK retail and London market-making bullion bank Barclays.
 
"If and when geopolitical tensions ease, we continue to expect gold to return to its downward trajectory."
 
Gold coin sales from the US Mint fell 58% during the first 6 months of this year compared with H1 2013, reports Bloomberg.
 
Legal gold inflows to India – the No.1 consumer nation until anti-import rules hit last summer – fell 74% on the latest data says the Economic Times from near record levels during the same period last year.

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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