Gold News

Gold & Silver Hit New 2-Week Highs as Oil Jumps on Iraq, Platinum Falls

GOLD and SILVER both pushed to new 2-week highs Thursday lunchtime in London, extending this week's gains beyond 1.4% but lagging crude oil's rise as Islamist insurgents pushed south in Iraq, meeting no opposition from government troops.
 
Platinum and palladium prices meantime fell hard as South Africa's AMCU union passed a new wage offer to 70,000 miners, now on strike since January.
 
With gold and silver trading above $1270 and $19.35 per ounce respectively, new US data meantime showed weaker-than-expected growth in May's retail sales, but previous months were revised higher.
 
Jobless claims for last week came in above analysts' consensus forecast, but rose only slightly from end-May's new 6-year low.
 
"Baghdad did not heed the KRG's warnings," says lieutenant general Jabbar Yawar of northern Iraq's Kurdistan Regional Government.
 
"The Iraqi Army has abandoned its posts. [Our] Peshmerga reinforcements have been dispatched to fill their places," securing the key oil-industry city of Kirkuk.
 
US crude oil contracts rose Thursday to 8-month highs, and Europe's main Brent contract rose more than 2% to the highest level since end-March at $112 per barrel.
 
"Oil is spiking on back of the Iraq news," says one London dealing desk in a note, "and might help gold go the same way, at least in very short term."
 
But the broader financial markets' high liquidity and low volatility, counters FX strategist Steven Barrow at Standard Bank, "[make] it unlikely that Iraq will derail the risk-on environment" for Western investment flows.
 
"When [bullish] positioning has fallen to a pronounced low," says an Asian trading house, looking at speculative trading in gold and silver futures, "prices have often risen substantially in the following 4-6 weeks."
 
Latest data showed record-high short betting against silver last week, plus a new 2014 low for speculative traders' net bullish position.
 
Further ahead, technical analysis from London market-maker Societe Generale highlights what it calls "first hints of price stabilization.
 
There are "signs of downward momentum ebbing," the bank's chart analysts write in a new Q3 2014 outlook.
 
Gold prices also now sit "in the vicinity of the decade-long trend lines," they add, showing a logarithmic uptrend linking the metal's low-points of 2001-2008.

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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