Gold News

Gold Trading 'Anemic' After 'Rejecting $1232', Banks' Commodities Profit Sink

GOLD TRADING in London saw Dollar prices slip to 1-week lows at $1202 on Thursday, as US stock markets rose and European shares eked out a small gain following better than expected manufacturing activity data.
 
The US currency held little changed following Wednesday's release of minutes from the Federal Reserve's latest policy meeting showed little chance of the first rate-rise from 0% coming in June, as formerly hinted.
 
Silver meantime held firmer than gold, trading above $17.15 per ounce as commodity prices more broadly rose with US Treasury bond prices.
 
The SPDR Gold Trust (NYSEArca:GLD) had seen further liquidation on Wednesday, shrinking to the fewest shares in issue since late January and needing only 715 tonnes to back their value – down 7.5% from February's recent peak and barel half the highs of 2011-2012.
 
After the Financial Times reported last weekend that London's gold trading floors "are much quieter" as client activity has fallen since the price peaks of 3-5 years ago, new data today said volumes in the world's central bullion market saw a "sharp fall" last month to the lowest level since September.
 
The value of gold transferred between the clearing members of the London bullion market fell 8.4% from March to average $20.2 billion per day, trade association the LBMA reported, while the number of transfers fell by almost 12%.
 
"Volumes have been anemic today," said one London trading desk Thursday, "and the flow of news softer...pointing to neutral fundamentals for gold.
 
Current positioning in Comex gold options – which will see June contracts expire next week – is also "pointing to yet more indecisive trading" the note adds.
 
"The market," says bullion market-maker Scotia Mocatta, "is still trying to digest [Tuesday]'s rejection off $1232" – the highest Dollar gold price since mid-February.
 
"Failure to clear the 50% retracement of the move seen this year," agrees technical analysis from Germany's Commerzbank, pointing to $1227, "does suggest that this upmove lack[ed] dynamism."
 
Income from commodities trading sank 28% in the first quarter of 2015 compared to the same period last year at the top 10 major investment banks, Reuters notes.
 
Japan's largest oil trader, Mitsui & Co. – owner of London spot gold and silver market maker Mitsui Global Precious Metals – expects profits to decline 22% this financial year, and is now looking to diversify beyond raw materials to look at "retail, health care, infrastructure connecting food and farms, and mobility."
 
Wednesday's statement of record fines for several major banks over FX manipulation also showed Swiss bullion bank UBS has been "shielded" from prosecution by the US Justice Department in its investigation into allegations of precious metals pricing, Bloomberg reports, regarding information it has supplied so far.

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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