Gold News

Gold Trading Spikes on Weak US Data, Dollar Price Avoids 5th Weekly Drop

GOLD TRADING in London on Friday afternoon saw wholesale prices jump 2.1% from an early low, briefly popping above $1100 per ounce as the US Dollar fell hard following weaker-than-expected consumer sentiment data for June.
 
US employment costs also missed analyst forecasts, with compensation and wages slowing to a 0.2% rise in Q2 from 0.7% in Q1.
 
The Euro jumped 1.5 cents against the Dollar to reach a sudden 2-day high above $1.11 in FX trading.
 
Gold then cleared Friday afternoon's benchmark auction in London at $1098.40 per ounce, avoiding a fifth weekly drop in succession – a run last seen in late 2014 and the summers of 2004-08.
 
July's run of 4 weekly losses was 2 weeks short of summer 2000's drop, and well short of summer 1996's 10-week run.
 
Friday's pop still left gold trading some 6.2% lower from the end of June, its heaviest 1-month drop since the gold crash of spring 2013.
 
Western coin mints reported heavy demand for July, with Australia's Perth Mint "surprised" at the strength of demand on this price drop.
 
Friday's trade in Shanghai gold contracts held firm on the main wholesale contract in China, the world's No.1 gold buying market in the first 6 months of 2015.
 
But volume in contracts for the kilobars preferred by Chinese investors fell sharply to less than half recent averages as its price rose to a premium above London quotes of nearly $3.75 per ounce, near the highest levels this month.
 
Hong Kong's wholesale dealing "[saw] demand only on Monday," Reuters quotes Ronald Leung at Lee Cheong Gold Dealers, reporting a small premium to London quotes of around $1 per ounce in the Asian gold trading hub.
 
"I think people are still bearish on gold because everyone is seeing all [this] bad news like a rate hike in September. No one wants to buy for now." 
 
Gold trading through London's wholesale market – heart of the world's professional bullion deals – fell in June to the lowest Dollar value since April 2010, new data said Friday.
 
Daily volumes dealt between the clearing members of the London Bullion Market Association averaged below $20 billion in June, down from a peak above $45bn in August 2011.
 
"We are bearish," says a technical analysis from Canada-based bullion bank Scotia Mocatta, "looking for another leg lower to target 1044 – the 2010 low."
 
Thursday's data from the SPDR Gold Trust (NYSEArca:GLD) showed the exchange-traded gold fund holding 680 tonnes of bullion to back its shares – a 7-year low unchanged from the end of last week.

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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