Gold News

Gold Price Drops 1.3% Ahead of US Fed Decision on "Zero Rate Promise", Still "Holding Well" Above $1200 as Crude Oil Hits Russian Ruble Again

GOLD PRICES slipped near 1-week lows at $1207 per ounce in London trade Monday, dropping 1.3% from the highest Friday finish in 7 weeks ahead of this week's key US Federal Reserve announcement.
Asian and European stock markets slipped overall once again, but European Brent crude prices rallied from last week's new 5-year lows while US oil slipped further below $60 per barrel.
Major government bond prices fell hard, pushing longer-term yields higher, on what Bloomberg calls "speculation" that the US Fed will drop its commitment to keeping Dollar rates at zero "for a considerable time" when it announces policy on Wednesday.
"Despite tumbling crude oil prices," says South Africa's Rand Refinery in a note, "the price of gold has held rather well and remains above the $1200 an ounce level."
But also looking at Dollar gold prices, "A retracement towards $1168 looks plausible," says the technical analysis team at French investment bank and London bullion market maker Societe Generale.
"Only a decisive break above $1240 will mean an extension in the recovery."
"News of a terrorist siege/hostage situation in a Sydney cafe had little impact on markets today," says a note from Swiss refining group MKS's Asian trading desk.
Looking at upcoming data releases, "Nothing will be of any particular consequence ahead of the [US Fed]meeting this week," says broker Marex Spectron's London bullion head David Govett.
Silver prices twice fell on Monday to rally off $16.80 per ounce, a new 5-year low when first reached in October.
The Russian Ruble fell to 60 per Dollar for the first time, down by one-third from September.
"Potentially bullish for gold," says a note from US brokers INTL FCStone, "there might be mounting credit issues associated with Dollar debt raised by Russian companies, many of them in the energy space."
Shanghai gold prices held flat in Yuan terms by the close today, extending their premium over London quotes to $1.90 per ounce.
Indicative of Chinese wholesale demand for importing metal, the last 3 months' average premium to London gold is nearer $2.40 per ounce.
Shanghai Securities News reports that jewelry sales in the major city of Shenzen have dropped 40-50% in the last year.
Leading jewelry manufacturer and retailer Chow Tai Fook last month reported a 41% drop in half-yearly gold sales.
With the Chinese New Year set to mark the peak of household gold demand in mid-February 2015, latest Chinese manufacturing activity – a key report for traders watching the growth rate of the world's second largest economy, and its No.1 gold producer and consumer – is due for release with HSBC bank's PMI data overnight.

Adrian Ash

Adrian Ash, BullionVault Gold News

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.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals