Gold News

Gold Outperformed by Copper, Silver Bars as Bond Bulls 'Abandon Ship', Investors 'Unpersuaded' by Inflation

SILVER BARS traded in London's wholesale market outperformed a rising gold price on Tuesday, briefly reaching 6-week highs above $24 per ounce as base and other industrial metals set fresh all-time records amid a supply squeeze hitting the London Metal Exchange.
 
Gold bullion bars recovered the $1780 level, erasing half the drop from last Thursday's 4-week peak at $1800 per ounce.
 
Copper bars for immediate delivery meantime held strong after breaking above $11,000 per ton for the first time ever yesterday at the LME, surging ahead of future settlement prices amid what Bloomberg calls " a critical shortfall in available inventories".
 
Large silver bars traded in London's wholesale market have now risen 7.0% from end-September's 14-month low.
 
Gold bullion has risen less than half as fast, and now shows 0% change from this time a decade while silver shows a 25% loss and industrial metals – as tracked by the LME Index – a 30% gain.
 
Chart of LME Index vs. gold bullion price's 10-year % change. Source: TradingEconomics
 
"People are not persuaded enough [by inflation] to go very long on gold," says Nicholas Frappell, global general manager at gold and silver bar refinery ABC Bullion.
 
"Macro investors for instance don't seem to be persuaded to buy more gold to hedge inflation."
 
"Demand in Shanghai remains robust" however says Swiss refiner MKS Pamp, pointing to a solid premium over London gold bar prices of $8 per ounce and also noting strong demand in Asia for silver.
 
Copper's available stockpiles at LME warehouses has sunk by almost 90% this month, Bloomberg reports, "driven by a steady flow of orders to take metal out of European depots.
 
"And while the record spot premiums should typically start attracting metal back into the warehouse network, there’s little sign of that happening so far."
 
Natural gas prices today edged lower again in Europe from their recent records, but crude oil held firmer with Brent above $84 per barrel and US WTI holding 7-year highs.
 
European government bond prices slipped once more in contrast, edging Germany's 10-year borrowing costs up towards last week's 5-month high of minus 0.09% per annum.
 
UK borrowing costs meantime rose within 5 basis points of last week's 2.5-year high of 1.20% per annum on 10-year debt, and comparable US Treasury yields edged back above 1.60% once again.
 
"Wall Street strategists who thought the coast was clear for bets on lower Treasury yields are abandoning ship after the market moved against them in a global bond selloff," says Bloomberg, pointing to a switch of advice from Canada's TD Bank and the UK's Barclays.
 
Yesterday's surprise drop in US industrial production, down 1.3% for the month in September, was followed Tuesday by a steeper-than-expected drop in new home-building permits.
 
"We believe that the US entered recession again around June 2021," says a new paper from former Bank of England policymaker David Blanchflower and fellow economics professor Alex Bryson, looking at consumer confidence ratings from the summer.
 
"[But] global monetary and fiscal policies are no longer outright supportive of gold in the US or globally," says a note from bullion bank HSBC. "With the era of ultra-loose monetary policies coming to an end and fiscal stimulus being pulled back, gold investment is down."
 
Platinum prices meantime fell back Tuesday, with wholesale bars of the primarily industrial precious metal shedding all but $10 of an overnight $25 rally towards $1060 per ounce – an 11-week high when reached last Thursday.

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.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals