Gold News

Silver Prices Tumble But 'Downtrend Over' as Consensus Grows on Gold Trading Higher Post-Fed Rate Rise

SILVER PRICES tumbled in London trade Thursday afternoon, dropping 3.4% in Dollar terms from the long Easter weekend as gold trading saw prices slip only 0.7%.
 
Both the British Pound and single Euro currency also sank with silver prices near 3-week lows to the Dollar, while European stock markets rose again, following Hong Kong's overnight jump to new 7-year highs.
 
US Treasury bond yields ticked higher, but held within the downtrend from 2014.
 
Gold priced in Dollars meantime stood 5.6% above start-November's new 5-year low. Priced in Euros gold traded 22% higher, touching €1120 per ounce for the first time in a week Thursday.
 
"Silver prices tested support that held" at $15.30 per ounce back in early March, says the latest Metal Matters from London market maker and LBMA Price participant Scotia Mocatta.
 
"We feel the long term downward trend may be over – expect a slow grind higher."
 
Gold prices have also "bottomed in local currencies, but not in Dollars," says metals and mining consultancy Thomson Reuters GFMS today, launching its Gold Survey 2015 and referring to the world's main miner and consumer-nation currencies.
 
"Western investors are likely to return in 2015," GFMS explains, "but not yet [because of] Dollar strength and the focus on US monetary policy."
 
Yesterday's minutes from the US Federal Reserve showed some policy-makers eager to raise rates from their historic low of 0% this June.
 
But while the direction of US interest rates looks key, says GFMS – concurring with the view presented last week by fellow London-based consultancy Metals Focus – "investors are already discounting a return to a rising interest rate cycle...Once [that] is in place, or signalled, asset reallocation is likely to commence and we expect gold to benefit accordingly." 
 
"The greater the perceived delay," agrees Scotia Mocatta, "the higher the gold price might go."
 
But "no matter when it happens," counters David Govett at brokers Marex Spectron in London, "it will be a negative factor for precious metals, and buying them now has very little point."
 
Meantime in China today – the world's No.1 gold miner and importing nation – trading in Shanghai's free-trade zone gold was again greater than volume in China's main domestic contract, the fourth day running since suddenly reaching that milestone last Friday.
 
Trading in the Shanghai Gold Exchange's international iAu9999 contract previously averaged just 6% of the SGE's main domestic Au(T+D) contract since launching last September.

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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