Gold News

Gold Prices Firm, Silver Jumps Again as Odds of Fed Rate Hike Slashed by Weak US Jobs Data

GOLD PRICES eased but held 90% of Friday's $30 jump in London trade Monday, sitting above $1135 per ounce as world stock markets extended the strong rebound in New York equities following last week's surprisingly weak US jobs data.
 
Japan's Nikkei added 1.8% and France's CAC40 rose 3.5%, while silver jumped ahead of gold prices again, adding another 35 cents to Friday's sudden 80c move to reach 6-week highs above $15.60 per ounce.
 
"The Fed's credibility is at stake if it fails to move on interest rates this year," says Mitsubishi Corp's precious metals analyst Jonathan Butler, noting that the US central bank has "spent the past two years preparing the markets.
 
"As such, Q4 could be a difficult one for precious metals if rate rises are priced in."
 
The chances of a US rate hike by December "have dwindled", says French investment bank and bullion market maker Societe Generale, now putting the odds of a delay until March 2016 at 50-50.
 
But for gold prices – and with traders in No.1 consumer market China on holiday until Thursday – "physical demand has been muted so far," SocGen goes on.
 
"The mood is rather to sell into price-strength until the broader sentiment towards gold improves."
 
Gold shipments into India's western state of Gujarat fell 80% last month from September 2014, the Times of India reports.
 
US bond traders now price the odds of an October "lift off" from zero at just 1-in-10, Bloomberg News says, citing futures market positioning.
 
Former US House speaker Stan Collender now sees a 50% chance of a government shutdown in December – such as happened in late 2013 – when the current stop-gap agreement over the debt ceiling expires. 
 
The US Fed lacked the tools to prevent the financial crisis starting in 2007, several senior members told a weekend conference in Boston about "macroprudential monetary policy", and the central bank remains " a long way from being able to successfully use such tools" today.
 
More banking executives "should have gone to jail", former US Fed chair Ben Bernanke told USAToday on Monday, blaming them for causing what it calls the Great Recession of 2008-2011.
 
The UK's Financial Conduct Authority – the only regulator so far to identify and fine a bullion bank for 'control weaknesses' inviting a member of staff to try and rig gold prices – now regulates three times as many companies as it did before the crash, an FCA member told a meeting entitled "regulation and responsibility" on the fringes of governing political party the Conservatives' annual conference in Manchester this morning.
 
Looking at today's gold price charts, "From a technical perspective," says a note from ICBC Standard Bank's commodities team, "Friday’s bounce slowed the downward momentum in gold but a close above $1148 is needed to turn the outlook more positive.
 
"A move up through $1160 would break a weekly downtrend stretching back to mid-2012 and open the way to $1200."

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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