Gold News

Gold Prices "Rangebound" as Global Unrest Trumped by "Improving US Data & Rate Rises"

GOLD PRICES moved in a $5 per ounce range Monday morning in London, holding below $1295 as world stock markets rallied from last week's drop.
 
With political leaders and royalty from Western Europe today marking the centenary of the First World War, Russia's defence ministry said its airforce is holding military exercises near the Ukraine border.
 
Israel offered a 7-hour ceasefire to militants in Gaza as a "humanitarian window".
 
Silver meantime bucked the slight fall in gold prices, edging 0.2% higher after failing to rally with on Friday following much weaker-than-forecast US jobs data.
 
"One slightly negative figure does not a bull market make for gold," says David Govett at brokers Marex Spectron in London.
 
With gold prices still below the "psychologically" important $1300 level, "Unless there is further serious unrest in any of the trouble spots in the world...we remain pretty much rangebound."
 
Bandits from the self-proclaimed Islamic State yesterday seized two small towns in Iraq's northern Kurdish region.
 
Gunmen linked to the same al Qaeda offshoot also traded fire with Lebanese soldiers near the border town of Arsal, Reuters reports.
 
"Good economic data," reckons Commerzbank's commodities team in Frankfurt, "are likely to put the subject of interest rate hikes back on the Fed's agenda. That should reduce the relative attractiveness of gold and silver and preclude any sharp rises in price."
 
"With the US economy picking up steam," agrees Edward Meir for US brokerage INTL FCStone, "investors will have to start discounting higher rates down the road [because] the Fed is running out of wiggle room."
 
Together with that risk of rising rates, Meir concludes, "sluggish investor and jewelry demand does not make the upside case for gold particularly persuasive...Even Chinese intake [is] now flagging."
 
After new Hong Kong data last week showed a marked drop in gold exports to China's mainland for June, down to a 17-month low, "a slide in Chinese demand will take away a key supporting factor for gold prices," says David Levenstein in South Africa for the Rand Refinery, "[which are] already pressured by an improving global economy and US stimulus withdrawal."
 
Speculative traders in US futures and options last week cut their overall bullish position in gold – net of bearish bets – by 9% from the previous week to a notional 512 tonnes of gold bullion, new data from US regulator the CFTC showed after Friday’s close.
 
Overall, the total number of gold futures and options contracts now open fell at the fastest pace since November to hit a 5-year low.
 
But with the world's largest gold ETF – the SPDR Gold Trust (NYSEArca:GLD) – adding 11 tonnes to its holdings last month to 801 tonnes, exchange-traded gold notes as a whole rose 15.7 tonnes in July, "the first monthly net inflows since March and the largest since November 2012," according to one bank analyst.

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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