Gold News

Gold Prices Flat Below $1200 Ahead of US Fed Decision on Zero Rate Promise, "Expect Volatility" as Russia Buoys Ruble with FX Intervention

GOLD PRICES traded flat in London on Wednesday, briefly spiking above $1200 per ounce as crude oil prices steadied, and the Russian Ruble rallied from yesterday's 20% plunge, ahead of the US Fed's latest policy statement.
 
With Russian media heavily trailing tomorrow's scheduled press conference from President Putin, Moscow joined the Opec oil cartel nations in saying it won't cut production in 2015, despite crude's plunge to 5-year lows.
 
The Ruble recovered to 64 per Dollar from new record lows overnight at 71 after the Central Bank of Russia announced new sales of Euros and Dollars from its foreign reserves to support its currency, but the government  refrained from imposing exchange controls to stem capital flight.
 
US Treasury bonds meantime edged down as traders looked to today's new policy statement from the Federal Reserve, widely expected to cut the key "considerable time" promise on keeping rates at zero.
 
"Expect a volatile session ahead," said one gold trading desk, "particularly if we see the Fed change some of their language in the accompanying policy statement."
 
Low interest rates, says London-HQ'ed consultancy Thomson Reuters GFMS, are helping deter gold miner hedging, because the gold market currently lacks any "premium" on forward sales over and above current spot prices.
 
"A break below $1192/86," said technical analysis from French bank Societe Generale, "would accelerate the down move as this would confirm a Head and Shoulders pattern."
 
"We suspect," says Karen Jones in her weekly technicals for Germany's Commerzbank, "that the market is attempting to base down at the $1146/1132 recent lows.
 
"However, gold has not quite done enough to confirm."
 
Forecasting a gentle rally to $1280 by end-2015, Australian bank ANZ says "physical gold demand in China and India were held back in 2014 amid high stocks and import controls respectively.
 
"Both these shackles have been removed, putting demand on a solid footing as we head into 2015."
 
New research from Australian bank Macquarie meantime shows gold has the weakest correlation with crude oil of all the major tradable metals, and has been less correlated since 2010 than the US stock market on a weekly basis.
 
The ratio of gold to oil prices, adds London consultancy Metals Focus, is now at the highest level since the late 1990s at 20 barrels per one ounce.

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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