Gold News

Gold & Silver Bullion Surge Sees LBMA Demand Rise, Shanghai Fall to Discount, ETFs Shrink

GOLD PRICES recovered an earlier dip in London trade Friday, heading for the best weekly gain since January – and the highest Friday finish since mid-February – as the Dollar hit fresh 3-month lows following weak US data.
 
Industrial production fell month-on-month for the 5th time running in April, data from the Federal Reserve said, while capacity utilization slipped to the weakest since August 2013.
 
US economic forecasters have cut their average growth prediction for 2015 from 3.2% to 2.4% since 3 months ago, the Philadelphia Fed said in its latest quarterly survey.
 
Consumer sentiment on the Reuters/Michigan survey today gave the weakest reading in 6 months.
 
"[These] US data may trigger the long-awaited US interest raise to be postponed further," says a note from the bullion and commodities desk at Commerzbank.
 
"Silver has been the best performing precious metal this week, up a staggering 8.8%," says Swiss refiner and finance group MKS.
 
Investors in exchange-traded trusts cut their exposure as bullion prices jumped yesterday, with both the iShares Silver Trust (NYSEArca:SLV) and the SPDR Gold Trust (NYSEArca:GLD) seeing net liquidation of stock.
 
With silver bullion surging through $17 per ounce to hit 3-month Dollar highs Thursday, the SLV ended the day needing 89 fewer tonnes to back its shares, marking the third heavy liquidation of the last 3 weeks and shrinking 2.5% since then to 9,976 tonnes.
 
The giant GLD – the world's largest exchange-traded trust fund by value at the peaks of 2011 and 2012 – shed another 4 tonnes of gold to end Thursday needing less than 724 tonnes of gold backing, a 6-year low when first reached in late 2014 and now reversing three-quarters of January's early jump.
 
Here in London on Friday, the PM run of global benchmark the LBMA Gold Price saw the suggested price need to rise – and bring out more selling – for the first time this week, finding a balance with buyers at $1220.50 per ounce.
 
Shanghai trade had earlier seen the city's international contract – dealt with Yuan held offshore for metal stored in the free-trade zone – close at the heaviest discount to comparable London quotes since early February at almost $3.50 per ounce.
 
Unlike with a China premium, however, traders cannot exploit this discount through buying Shanghai gold and selling it in London, because Beijing continues to maintain a ban on exports of gold bullion bars.

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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