Gold News

"Don't Go Short" Gold Prices Ahead of Fed Says Analyst as US Inflation Goes Negative

GOLD PRICES held steady around $1235 per ounce in Asian and London trade ahead of the US Fed's policy statement on Wednesday.
 
US consumer prices fell in August from July, new data showed meantime, with minus 0.2% marking the first negative monthly inflation reading since spring 2012.
 
World stock markets ticked higher overall as commodities were flat and major government bond prices rose, nudging yields down.
 
With one day to go before Scotland's vote on independence from the UK, the British Pound regained last week's sharp loss after pollsters put the "Yes" camp ahead.
 
Gold prices for UK savers today retreated to unchanged for the week at £757 per ounce.
 
"Rising rates and a significantly stronger Dollar present headwinds" for gold prices, says a new note from metals analyst Suki Cooper at London market-making bullion bank Barclays.
 
Those factors "are set to overwhelm any seasonal strength in physical demand this year," Cooper believes, cutting her gold price forecast for 2015 to an average $1180 per ounce – the 3-year low reached twice in 2013.
 
"The months of August and September," explains Swiss refiner MKS in a trading note, "are typically strong for gold due to upcoming festivals and wedding season" in India – formerly the world's No.1 gold consumer nation.
 
"However premiums over loco London [gold prices] are currently sitting around $5 per ounce, having been as high as $170 this time last year" after the Indian government first imposed strict anti-gold import rules.
 
"The 80:20 scheme will continue," today's Hindu Business Line quotes Krishna Pratap Singh, a director at India's Directorate-General of Export Promotion, referring to a rule requiring one-fifth of any new imports to be re-exported before the rest is released to the domestic market.
 
"We have [already] allowed more banks to import gold...help[ing] cut the premium that jewellers had to pay."
 
Ahead of the US Fed decision Wednesday, "We would want to avoid taking any positions over the next 48 hours," says a note from US brokerage INTL FCStone.
 
"But if pressed," it adds – saying today's statement is more likely to leave the Fed's forecast for possible interest-rate hikes from zero until well into 2015 – "we would rather be long gold at this point than short."
 
Further ahead, and "as the US economy continues to recover and monetary policies in other countries diverge," Bloomberg quotes analyst Yang Xi at Yongan Futures Co. in Hangzhou, China, "the Dollar will remain strong and put precious metals under pressure."
 
The Eurozone's latest long-term bank-lending scheme will begin Thursday, with the European Central Banking injecting cash in a bid to boost private-sector borrowing.
 
Beijing today injected $81 billion into China's 5 largest banks according to Chinese reports unconfirmed by the People's Bank.

Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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