Gold News

Gold Price Sinks as Nato Backs UK Over Russian Spy Poisoning, Moscow Hoards Record Reserves

GOLD PRICES sank on Friday despite yet worsening tensions over the attempted assassination of a former Russian spy in the UK, falling to 2-week lows versus the Dollar following stronger-than-expected US industrial output data.
 
Moscow is "overwhelmingly likely" to have ordered the attack on Russian defector Sergei Skripal and his daughter Yulia with a 'novichok' nerve agent said British foreign secretary Boris Johnson this morning.
 
The Kremlin maintains it had no involvement, calling the accusations by London – joined yesterday by Nato allies Washington, Paris and Berlin – "shocking and unforgivable".
 
"The UK is not alone," said Nato secretary-general Jens Stoltenberg today. "All allies stand in solidarity with the UK."
 
Latest data say Russia was the heaviest central-bank gold buyer for the sixth year running in 2017, growing its bullion reserves to 1,857 tonnes, just behind China as the sixth largest national holder.
 
"In late-January, President Vladimir Putin said that the country's gold reserves were looking up," adds the Sputnik website – successor to Russia's state-run news agency RIA Novosti and Voice of Russia radio broadcaster – today.
 
In 2005 Putin publicly approved a 10% target for gold in Russia's central bank reserves.
 
That level was reached in 2014, rising since to almost 18% by end-2017 according to data compiled by market-development organization the World Gold Council.
 
"Russian gold mine production has been steadily growing over the past six years," says a note from Saida Litosh, precious metals manager at analysts Thomson Reuters GFMS, rising 6% in 2017 to "an all-time high of 269.4 tonnes" – putting it behind only China and Australia – "facilitated by...privatisation of state-owned gold mining companies as well as consolidation of smaller gold producers."
 
Analysis by BullionVault says that since 2013, when the Ukraine crisis first broke – and with Western sanctions starting the following year then hurting international sales of Russian-mined gold – Moscow's central bank has bought 70% of the country's domestic mine output.
 
Chart of Russia annual gold mine output vs its central-bank buying. Source: BullionVault
 
Russia is meantime "preparing to sell $7bn of bonds" into the European debt market today, the FT reports "in an apparent show of defiance at international condemnation of its suspected involvement."
 
This follows Wednesday's €750m debt placement through London by Russia state-owned emergy giant Gazprom.
 
Dropping to $1311 per ounce on Friday, the gold price fell as the Dollar rose after new data said US industrial output rose 1.1% last month from January, more than 3 times Wall Street's consensus estimate.
 
The UK gold price in Pounds per ounce dropped to £941, down over 2% since news of the Skripal poisoning broke and near the metal's 2017 lows for British investors.

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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