Gold News

Gold & Silver Prices Pop Higher as Yuan Weakness "Run Its Course", Bearish Sentiment Seen Preceding "Strong Rally"

GOLD and silver prices both popped to near 2-week highs Tuesday lunchtime in London, rising as US stock futures pointed lower.
 
Silver prices touched $19.20 per ounce for the 3rd time in 3 sessions, while gold spiked $8 per ounce to $1263 before also easing back.
 
European money-market rates fell to new all-time lows at 0.05%, and the Euro currency fell towards 4-month lows, as the Chinese Yuan continued to strengthen against the Dollar.
 
Chinese prices today extended Shanghai's premium over London gold, closing equal to $1257 per ounce even as the Yuan rose again on the currency market following China's strong trade balance data.
 
With China's CPI data showing consumer prices 2.5% higher last month from May 2013, "inflation [also] looks to have bottomed," reckons the Macro Man financial blog – "another reason why [the People's Bank] has decided that Yuan weakness has now run its course."
 
The Euro's drop, plus the rise in Dollar prices, took gold bullion for Eurozone investors 1.1% higher from the start of Asian trade to €931 per ounce.
 
The "second half of the year [has] found many portfolios un-invested in precious metals," notes George Gero at RBC Wealth Management.
 
"Sentiment indicators," writes technical chart analyst Axel Rudolph at Germany's Commerzbank, "show that around 90% of gold traders are bearish.
 
"This is also what happened in late December before a strong rally unfolded."
 
"Heavy speculative short positions on the Comex," agrees London market maker HSBC, "almost the highest this year, leave gold open to a short covering rally.
 
"[But] we do not see an immediate or obvious catalyst."
 
The recent "steadying" of gold prices, says HSBC, comes from better emerging-market demand but an "unwinding" of bullish bets by Western speculators thanks to "easing geopolitical tensions in Ukraine."
 
Kiev said yesterday it has reached "mutual understanding" with Moscow over some of its peace plan, proposed by new president Petro Poroshenko, for eastern Ukraine.
 
Last night's 3am deadline for Ukraine to pay $4.5 billion, demanded by Russia's Gazprom if gas supplies are to continue, passed without any agreement at talks in Paris.
 
Germany foreign minister Frank-Walter Steinmeier is quoted saying he sees "some faint light at the end of the tunnel" in the Ukraine-Russia crisis.
 
Today's falling Euro saw the British Pound reach an 18-month high vs. the single currency, after new data showed a surprise jump in UK manufacturing output, growing at the fastest pace in 3 years.
 
London's FTSE-100 bucked the rise in European equities, dropping 0.4% by early afternoon.
 
"The time when it becomes appropriate for interest rates  in the UK to start to rise...is approaching," said Bank of England voting member Ian McCafferty in a radio interview Monday.

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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