Gold News

Gold & Silver Flat in China, Hit New Multi-Month Highs in London as Asian Centres Vie to Lead Bullion Pricing

GOLD and SILVER prices rose in London Tuesday morning, rising after Chinese trade closed to hit new 10 and 14-week highs respectively, before edging back as Western stock markets held flat.
 
"Weaker US equity markets provided modest support for gold prices [Monday]," says one broker's note, "but failed to unleash the buying that was evident last week."
 
The giant SPDR Gold Trust (NYSEARCA:GLD) added 2.4 tonnes Monday to its 782-tonne holdings, the largest 1-day addition since late May, and representing growing investor demand for its shares.
 
But professional investors "are not focusing on gold," reckons John Toohey at $62 billion mutual fund manager USAA Investments, speaking to Bloomberg.
 
"Barring temporary events like Ukraine or Iraq, we don't see any long-term fundamental reasons out there that could push gold higher."
 
Gold rose $10 per ounce between 8-10am London time Tuesday, reaching $1325 per ounce, previously identified by technical analysts as where the sloping downtrend in prices since 2012 now sits.
 
London's Silver Fix – the single price clearing the greatest volume of bullion-bank orders at midday – came in Tuesday at $21.12 per ounce, the highest level since 17 March.
 
With the current Silver Fix set to end in mid-August, the London Bullion Market Association – trade association for the world's No.1 bullion center – posted all 7 of the Silver Daily Price proposals presented to members attending last Friday's special seminar in the City.
 
Shanghai gold prices meantime ended Tuesday's trade unchanged against the Yuan, but switched Monday's $1.40 premium above London quotes to a discount as the Chinese currency ticked lower on the FX market.
 
Swiss refiner Metalor said it is joining Shanghai's new international bullion exchange – to be launched in the city's free-trade zone this autumn – as a "founder member".
 
"China will have a bigger say in pricing metal in their domestic market," Reuters quotes Metalor chairman Scott Morrison. "But because of structural limitations...they cannot immediately influence global prices."
 
Exports of gold bullion are tightly restricted from China. Imports last year totalled a record 1,300 tonnes through Hong Kong.
 
"Having a local price for local markets ensures markets are more efficient," says LBMA chief executive Ruth Crowell, commenting on a separate gold futures contract – due for launch Wednesday – in Singapore.
 
"As more markets develop, local prices for precious metals will become more tailored."
 
But for Asian traders, says Standard Bank's Tokyo manager Yuichi Ikemizu, "If you need a price discovery function, then [US gold futures exchange] Comex serves us pretty well.
 
"The fact is the liquidity is there and not in the local exchanges."

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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