Gold News

Gold Prices Break $1300, Hit 11-Year Record Negative Correlation with US Stocks

GOLD PRICES rose Friday in London, breaking to 5-session highs above $1300 per ounce and heading for the 13th weekly gain in 17 in 2014 so far as world stock markets fell.
 
The S&P 500 index was on track for only its 9th weekly gain.
 
The rolling 12-month correlation of gold and US stocks currently stands at the most negative annual average since end-2002, analysis by Bullionvault shows.
 
"A global recovery, particularly one led by the US, is not good for gold," reckons Neil Gregson, manager of J.P.Morgan's Natural Resources fund, speaking to The Telegraph.
 
"We see a challenging environment for gold in the year ahead," says Gregson, whose fund has lost two-thirds by value to $1.5 billion in the 3 years since silver prices peaked, and who currently holds a decade-low allocation to gold and gold-mining stocks.
 
Whipping Thursday in opposition to major Western stockmarkets, "Spot gold was all tee'd up to explode, which it did," says a note from Commerzbank's dealers, pointing to a build-up in bearish bets against gold, plus "heightened tensions in Ukraine."
 
Interim Ukraine prime minister Arseniy Yatsenyuk today accused Moscow of "wanting to start WWIII" after Russian troops came within 1km of their joint border in Thursday's hastily-called mobilization.
 
Russia's central bank cut its gold bullion reserves by 1.2 tonnes in March, new data showed overnight. Buying on average 8 tonnes of gold every month since mid-2007, it has been by far the world's heaviest official-sector investor, taking Moscow's reserves from 400 tonnes to more than 1,000.
 
Gold reserves reported by the central bank in Turkey – the world's fourth largest private consumer nation – also fell last month, reversing February's 3% growth and taking Ankara's total to 483 tonnes.
 
That includes commercial bank customers' deposits, allowed and counted as official reserves since 2012.
 
Gold prices in China, the world's No.1 consumer market, ended Friday in Shanghai some $1.70 per ounce below London quotes, extending the run of discounts to a 9th week.
 
India in contrast – overtaken by China last year – saw gold premiums to global prices reach 2.5-month highs today at $110 per ounce, Reuters reports, as demand grows ahead of the spring Akshaya Tritiya festival but supplies are  capped by anti-import rules and a crackdown on smuggling.
 
Costs to borrow gold in London, heart of the world's wholesale bullion market, today edged back towards this week's 8-month highs.

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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