Gold News

Gold Trading Quiet as Price Hits 7-Week High After Fed Minutes, Seen Below $1000 in 2016

GOLD TRADING in London saw prices hold firm on Friday, recording the highest weekly close at the benchmark LBMA auction in 7 weeks at $1151 per ounce.
 
World stock markets also rose to 7-week highs in aggregate following Thursday's release of minutes from the US Federal Reserve's September policy meeting, which showed only 1 member out of 10 voting to raise interest rates from 0% as previously hinted and expected.
 
Trading some 0.9% higher from last Friday afternoon's benchmark, today's auction took only 1 round to find its market clearing price, with the bid volume worth $89.8 million – barely half the July-September average.
 
Gold trading in Shanghai had earlier risen a little following yesterday's return from the National Day 'Golden Week' holidays. Silver volumes were higher again, touching fresh multi-month highs.
 
Silver's benchmark price in London – also discovered by electronic auction on behalf of trade body the London Bullion Market Association – today found its highest level since mid-June at $15.99 per ounce.
 
The LBMA's executive management London today issued a request for information from "potential solution providers" after a strategic review of the City's bullion market – heart of the world's wholesale trading – advised it seek "greater transparency...to attract greater liquidity [and] to increase efficiency and lower the costs for institutions of doing business."
 
Latest data from the UK's tax authorities today showed net outflows of 112 tonnes from London's specialist gold bullion vaults in August – the sharpest drop since last November's near 5-year low in prices – as the monthly average in Dollar terms hit fresh 5.5-year lows at $1117 per ounce,
UK net gold imports
 
Now totalling 300 tonnes in 2015 so far, gold bullion outflows from London are 50% ahead of the same period last year.
 
The gold price crash of 2013 saw a net total of 1,439 tonnes of large, 400-ounce bars leave the UK, primarily destined for Asian markets via re-casting into kilobars in Switzerland.
 
"Looking at 2016," says a new precious metals analysis from French investment and bullion bank Natixis, "we believe the price of gold will continue to be heavily influenced by the Fed’s interest rate decisions."
 
Despite last month's delay, "Rising interest rates increase the opportunity cost of holding gold," Natixis' analyst Bernard Dahdah goes on, forecasting an average 2016 price of $990 per ounce and saying that "demand from central banks and China are expected to remain weak compared to previous years [while] supply from physically-backed ETPs is expected to continue at a slow pace."
 
Gold imports to India – to which Natixis says it is one of the largest suppliers – reportedly fell over 50% in September from a surge in August, according to Bloomberg News today, retreating towards previous monthly averages at 67 tonnes.

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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