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Gold Jumps vs. Sinking Dollar But Weak Demand for Bars, Comex Leads as India-Pakistan Nuclear Tensions Worsen

GOLD BAR prices shot to new 4-month highs against the Dollar in wholesale trade on Monday morning in London as the US currency plunged to a 3-year low versus the world's other currencies amid worsening tensions between nuclear states India and Pakistan, write Steffen Grosshauser and Adrian Ash at BullionVault.
 
With US markets shut for Martin Luther King Day, Asian shares hit historic highs, following Wall Street's new record-high closes on Friday.
 
But Eurozone equities held flat overall as the single currency hit new 3-year highs against the Dollar, adding 3.5 cents per Euro to the region's export prices since this time last week alone.
 
After gold rose for a fifth straight week, the Dollar price of large wholesale bars on Monday touched $1344 per ounce, gaining more than $100 since its near 5-month low of mid-December.
 
Wholesale gold bar prices measured in Euros briefly touched €1100 before dropping back below last week's close at €1096 per ounce, little changed for 2018 to date.
 
Latest data show hedge funds and other speculative investors raising their bullish betting on Comex gold futures and options contracts yet again last week.
 
Growing their bullish bets by 75% over the last month as a group, the Managed Money category of traders has halved its bearish betting from what was a 5-month high according to data released by US regulator the Commodity Futures Trading Commission (CFTC).
 
Overall that grew the net speculative position of hedge funds and other money managers by 146% between mid-December and last Tuesday, making it one-third larger than the last 10 years' average.
 
Chart of 'Managed Money' net speculative long in Comex gold futures and options. Source: BullionVault via CFTC
 
"We are likely to see further short squeezes over the near-term," says the latest Asian trading note from Swiss refiners MKS Pamp, predicting that more traders will be forced to close their bearish bets on Comex futures and options.
 
"Physical demand out of Asia [in contrast] remained relatively restrained on Monday," MKS says.
 
With only a month to go before the Lunar New Year holidays, the price of gold bars already landed in China – the No.1 consumer market – today edged up to around $8.40 per ounce above comparable London quotes.
 
But that held the average Shanghai premium in 2018 so far at just 80% of the typical incentive to new imports.
 
Amongst physically-backed Western investment products meantime, the giant SPDR Gold Trust (NYSEArca:GLD) shrank 1.6% over the month preceding Friday's close, while the Dollar price of wholesale gold bullion bars rose 6.9%.
 
"While the weaker Dollar remained gold's primary driver, investors are keeping an eye on the simmering geopolitical hot spot in the Middle East," reckons Stephen Innes, head of FX trading at spread-betting broker Oanda.
 
US President Donald Trump set an ultimatum to European policy makers this weekend to fix the "terrible flaws" of the nuclear deal between Teheran and the major Western governments, threatening the United States will pull out.
 
"I am very happy to see that the White House has failed to disrupt international obligations," countered Iranian President Hassan Rouhani, noting that Trump has yet to revoke the deal as promised in his electoin campaign of late 2016.
 
"This means victory of law over dictatorship."
 
Tensions meantime rose over the disputed Kashmir border after India said it killed 7 soldiers from Pakistan at the weekend, spurring Karachi's Dawn newspaper to say that crossing the border amounts to "an act of war" between the two nuclear-armed nations.
Posted: January 15, 2018, 2:21 pm

GLD Gold Investment Goes AWOL as 'Short Covering' Sees Bullion Jump vs. Sinking Dollar

GOLD INVESTMENT bars pushed their New Year 2018 gains to 2.3% versus a falling Dollar in London trade Friday, rising even as world stock markets extended yesterday's fresh record highs in US equities.
 
Large bullion bars traded by wholesalers and investment dealers reached new 4-month highs at $1332 per ounce before edging back after new data said US inflation in consumer prices held firmer than expected in December.
 
The official CPI index rose 2.1% from 12 months before, with so-called "core" prices rising 1.8% from November's 1.7% annual pace.
 
Platinum prices outpaced gold yet again, adding 7.3% for 2018 to date to touch 17-week highs just $4 shy of the $1000 mark.
 
But silver lagged badly, trading lower for the week even against the US Dollar.
 
"No doubt stretched shorts instigated over the past fortnight are playing a role in the [gold] price gain," says the latest trading note from Swiss refiners MKS Pamp, pointing to speculative trading in Comex futures and options contracts, rather than physical bullion.
 
"[A] test [of] the recent high of $1357 (September 2017) will see further aggressive short covering."
 
Amongst gold-backed trust funds, the giant SPDR Gold Trust (NYSEArca:GLD) ended Thursday unchanged in size even as the share price rose with the cost of bullion.
 
Thanks to shareholders liquidating the GLD – a major proxy for investment funds wanting to track the gold price – it has now shrunk 1.6% since bullion bottomed at 5-month lows immediately before the US Fed's December rate rise.
 
Investment gold prices have in contrast gained 7.6% for Dollar buyers.
 
The GLD was last this small in late-August. Gold prices were also then rising through $1330 per ounce.
 
Chart of SPDR Gold Trust (NYSEArca:GLD) size versus Dollar gold prices. Source: BullionVault via ExchangeTradedGold
 
The single Euro currency meantime rose Friday to new 3-year highs above $1.21.
 
That pushed gold investing prices in Euro terms back down to unchanged for the week at €1098 per ounce.
 
Yen gold prices stood 1.0% lower from last Friday's 30-month peak as the Japanese currency rose to 6-week highs versus the Dollar on the FX market.
 
"Most Western commentators do not give developments in Japan as much attention as it deserves," says the latest Global Strategy note from perma-bear Albert Edwards at French investment bank Societe Generale.
 
"Could it be that a surprise monetary tightening in Japan will finally burst the global asset price bubble? It is now entirely conceivable that the improved economic and inflation picture...prompts [the Bank of Japan to cut its QE]...leaving the market badly wrong-footed and prompting a massive 2008-like unwind."
 
Having bucked the trend of gaining versus the Dollar all week, the Chinese Yuan also jumped overnight Friday, hitting its strongest level versus the US currency since September's spike to 18-month highs.
 
Priced in the Yuan, Shanghai gold rose only one-third as fast as global Dollar quotes for investment-grade bullion.
 
That squashed the Shanghai premium back below $8 per ounce, holding this week's average incentive for new imports to the world's No.1 consumer nation almost 20% below typical levels.
 
"Physical interest out of Asia continues to remain muted," says MKS Pamp. "Rather, the metal continues to remain bid on the back of a weaker greenback.
 
After China's factory-gate inflation slowed only to 4.9% per annum in December, stronger than analysts forecast, US producer prices showed their first month-on-month decline in a year on Thursday's new data, pulling the annual rate of inflation down to 2.6%.
Posted: January 12, 2018, 1:42 pm

Gold Price Slips from 30-Month Yen High as Beijing Calls 'Fake News' on US T-Bond Rumor

GOLD PRICES rose back above $1320 per ounce against a weakening US Dollar on Thursday as major government bond yields rose once more and Beijing played down rumors it might stop or cut its demand for US government debt.
 
Responding to Wednesday's claims from Bloomberg that the People's Bank may stop buying Treasuries as a protest against President Donald Trump's rhetoric on China's trade surplus with the US, "We learned the news through some media reports," said the State Administration of Foreign Exchange, calling itself a "responsible investor" acting only on the "principle of diversification.
 
"In our opinion, the news may quote the wrong source of information, or it may be false news."
 
The Euro replayed yesterday's 1-cent gain, rising back above $1.20 and pushing the gold price for single currency investors back below €1100 per ounce.
 
World stock markets meantime extended Wall Street's fall, with Tokyo's Nikkei index trading 1% below last week's 26-year high as the Yen continued to rise on the FX market.
 
The gold price in Japanese Yen today traded 1.5% below last week's jump to 30-month highs.
 
Chart of gold price in Japanese Yen. Source: BullionVault
 
Mexico's Peso and the Canadian Dollar meantime both fell to 1-week lows against the US currency after President Donald Trump said he's pushing for a change to the NAFTA free trade agreement, and may pull out – as threatened during his election campaign – if Washington's partners don't agree.
 
"The most straightforward (& boring) explanation" for Wednesday's report on Beijing's T-bond holdings "is that China has hit its Treasury portfolio target [around] 40% and has no further need to buy if reserves are constant," says Brad Setser, a senior fellow at the Council on Foreign Relations and former assistant secretary for international economic analysis in the US Treasury.
 
"But why not make a virtue out of a necessity and remind the Trump Administration of the possibility that China could impact US markets as it considers a set of trade remedies?"
 
The Chinese Yuan today edged higher on the FX market after being the only major currency to drop against the plunging US Dollar on Wednesday, a move Beijing refused to confirm or deny imposing on Chinese banks.
 
That helped the Shanghai gold premium rise to $8.80 per ounce above London bullion quotes, back near the typical incentive for importers to make new shipments into the world's No.1 consumer nation.
 
The key gold buying festival of Lunar New Year will coincide next month with Valentine's Day.
 
"Despite improving over 2016 levels, 2017 demand in Asia, gold's biggest market, sits significantly below that of a few years ago," write Emily Balsamo and Rhona O'Connell at specialist analysts GFMS Thomson Reuters in a new 2018 outlook,
 
"Purchases in the two largest consuming nations, India and China, were mixed [in 2017] with India recovering from low offtake in 2016, but with China hampered by faltering economic activity and reduced price expectations."
Posted: January 11, 2018, 2:05 pm

Gold Prices Jump with Yen, Shrug Off Bond Yields, on China-US Bonds Rumor

GOLD PRICES jumped 1.2% against a plunging Dollar in London trade Wednesday morning, setting the highest bullion-market benchmark in 4 months as financial markets whipped on rumors that China may stop buying more US government debt for its huge foreign currency reserves.
 
Bloomberg News says officials running China's $3.14 trillion of central-bank reserves have "recommended" reducing or pausing the purchase of US Treasury bonds, blaming tensions with President Donald Trump over China's huge trade surplus, plus better returns offered by other assets.
 
Beijing grew its holdings of US debt some 13% to $1.19 trillion in the 12 months to October, Treasury data show, after slashing them at a record pace in 2016.
 
Bloomberg's report comes a day after the Bank of Japan said it's cutting the amount of long-dated Japanese government debt it buys.
 
That's part of what some news-wires call "QE tapering" by Japan, despite Tokyo's official plan to create and spend enough money buying bonds to support their price and so keep the yield they offer at 0%.
 
London's AM gold price benchmark on Wednesday took 19 rounds and lasted 13 minutes after finding a heavy imbalance of demand over supply at an opening quote of $1316.05 per ounce.
 
The process finally cleared at $1321.65 per ounce – the highest fix since 15 September.
 
Commodity prices all rose against the falling Dollar, pushing copper up to new 4-year highs and Brent crude oil up above $69 per barrel.
 
China's stock markets edged higher but Tokyo fell from 26-year highs and Eurozone equities dropped hard as the single Euro currency jumped almost 1 cent and the Japanese Yen surged near a 6-week high at stronger than €111.3 per Dollar. 
 
Dollar-priced gold showed its strongest-ever connection with the Yen's Dollar value in 2017, averaging a 5-week correlation across the year of minus 0.83 with the USDJPY exchange rate.
 
That statistic would read -1.0 if the Dollar's Yen value moved perfectly opposite to the Dollar price of gold. 
 
Chart of Friday gold price in Dollars vs. 1-year average of rolling 5-week correlation with USDJPY exchange rate. Source: BullionVault
 
Alone amongst major currencies the Chinese Yuan in contrast fell 0.5% against the Dollar on Wednesday even as the rest of the world's money jumped.
 
The People's Bank "neither confirmed nor denied" interfering in the Yuan's exchange rate in an email reply to Caixin News.
 
Despite next month's Lunar New Year holidays – the heaviest gold-buying season in the world's No.1 consumer nation – the drop in the Yuan squashed the Shanghai premium to London gold quotes beneath $5.80 per ounce.
 
The smallest incentive for new bullion imports into China since September, that was one-third below its average level.
 
Bond yields rose across the board Wednesday as all major-government debt prices fell, jumping sharpest on UK Gilts and German Bunds.
 
Outside the Japanese Yen, gold prices also jumped for non-Dollar investors, taking the UK gold price in Pounds per ounce back to Friday's 5-week highs at £978 and taking bullion for Eurozone investors up near €1105.
 
Silver prices in contrast struggled, reclaiming only half of this week's prior loss against the Dollar to trade at $17.11 per ounce.
 
Platinum tracked gold prices more closely, edging its highest price against the falling Dollar since mid-September at $972 per ounce.
Posted: January 10, 2018, 1:43 pm

Gold Price Slips But Technical Analysts Target Break Above $1355 Sept High

GOLD PRICES slipped Tuesday in London's wholesale market, falling for only the fourth time in 16 trading days as world stock markets, commodities and government bond prices all rose yet again.
 
The US Dollar extended this week's rally from 3-month lows on the currency market, pushing the Euro down to $1.19205, a 7-session low.
 
That held the price of wholesale gold investment bars above €1100 per ounce for French, German and Italian investors, its strongest level for nearly 9 weeks.
 
China's Yuan also fell against the Dollar, while Shanghai gold premiums – an indicator of demand and supply inside the world's No.1 mining, importing and consumer nation – slipped back to $7 per ounce above London quotes.
 
With only 5 weeks until China's peak Lunar New Year shopping season, that was near the weakest incentive for new bullion imports since mid-September.
 
"Gold could finally break out of its four-year trading range if inflation starts to lift globally," says a new 2018 commodities outlook from former London bullion clearing bank Barclays, tipping mining stocks  more broadly as "compelling [on] a strengthening macro backdrop, limited capex, strong earnings momentum...cheap valuation multiples and light [investor] positioning."
 
Shorter term, "Gold should see [support] at the recent low of $1315 and the psychological $1300 level below that," reckons Swiss refining and finance group MKS Pamp's Asian trading desk.
 
"On the upside, a break above lasts weeks high of $1324 could see the yellow metal make a move on the September top of $1355."
 
The September peak "will be a decisive level for a larger up trend" agrees French investment and bullion market-making bank Societe Generale's technical analysis team today, calling that $1350-1356 level "the neckline" of a "large Inverted Head and Shoulder pattern."
 
This major reversal pattern "forms after a downtrend," explains StockCharts. "[It] contains three successive troughs with the middle trough (head) being the deepest and the two outside troughs (shoulders) being shallower.
 
Chart of Dollar gold price with 'neckline' of inverted head and shoulders as seen by SocGen's technical analysts. Source: BullionVault via St.Louis Fed
 
"A clear move above $1356 will mean confirmation of the formation," says SocGen's note, "and this will lead to next leg of up move towards $1433/1485 first."
 
"It is quite possible that the yellow metal could attempt to hit $1357 in the not too distant future," says a separate note from Canadian brokerage TD Securities, "[because] investors seem ready to take hefty long gold positions even as equity markets are surging."
 
Last week's positioning data for Comex gold futures and options showed the sharpest jump in speculative bullish betting by money managers, net of that group's bearish bets, since mid-August.
 
TD's Bart Melek gave the best 2017 average gold price forecast in industry body the LBMA's annual competition last year, predicting $1257 per ounce against the $1256 out-turn at London's afternoon benchmarking.
 
He now forecasts a 4.5% rise in gold for 2018, predicting an average annual price of $1313 per ounce.
 
Near term, "A move toward $1375 is possible should the market believe the US central bank will be gentle in their rate hike signaling," says TD's latest note.
 
Federal Reserve voting member Raphael Bostic of the Atlanta branch yesterday said he sees a need for only 2 further rate rises in 2018, echoing a growing chorus of Fed officials calling for "lower for longer" amid weaker-than-expected inflation data.
Posted: January 9, 2018, 2:01 pm

Silver Lags Gold Price But Comex Speculators Turn Net Bullish as Fed Member Cuts Dollar Rate Outlook

GOLD PRICES held onto last week's 1.4% gains in London trade Monday but silver slipped amid a rally in the Dollar on the forex market.
 
World equities pushed up to fresh all-time record highs as major government bond prices also rose, pushing interest rates lower.
 
European banking stocks lagged the broader gain in equities, however, after Germany's Deutsche Bank said at the weekend it will post a small loss for Q4 2017 thanks to US President Donald Trump's US tax reforms, now blocking it from claiming a credit against €1.5 billion ($1.8bn) of prior losses.
 
Silver prices retreated 0.4% as the Dollar rose, holding at 5-week highs for non-Dollar investors.
 
Gold meantime held just shy of $1320 per ounce, gaining 6.8% against the Dollar since the US Federal Reserve raised its key interest rate as expected in mid-December.
 
"The tax reform is mixed bag for gold," says a note from US financial services group Bank of America-Merrill Lynch, forecasting an average gold price of $1350 per ounce this year.
 
"A potential US Dollar rally in [early] 2018 may increase headwinds, but rising inflation, a higher budget deficit and linked to that, the risk of a sustained decline of the US currency medium-term are supportive.
 
"The tax cuts enacted by the US Congress are unlikely to provide significant support for the US Dollar," counters French investment bank Societe Generale.
 
"The Fed should tighten only very gradually...[So go] long commodities; long gold & gold miners."
 
Federal Reserve 2018 voting member Patrick Harker on Friday said he wants to see just 2 more rate rises this year, because "If soft inflation persists it may pose a significant problem."
 
The last week of 2017 saw hedge funds and other money managers trading Comex gold futures and options hike their bullish bets, net of bearish contracts, by 39% according to the latest data from US regulators the CFTC.
 
Reaching the largest size since mid-November, the net speculative long position of the Managed Money category rose almost one fifth above the last 10 years' average.
 
Silver betting meantime swung back to positive after recording 3 weeks of 'net short', the first time since July marked the first such positioning in almost 2 years.
 
Chart of silver price vs. net betting by the 'Managed Money' category of Comex trader. Source: BullionVault via CFTC
 
"Silver was unable to test above Friday's high during Asian hours today," says one trading desk in a note, "[but] should continue to see support around $16.95, the 200-day moving average."
 
"Resistance remains unchanged at $17.38," adds the New York team at bullion bank Scotia Mocatta, pointing to the metal's high in November.
 
Monday's Dollar rally saw the Euro fall to a 1-week low, down more than 1 cent from Thursday's top near 3-year highs despite a raft of positive data on retail sales and economic confidence.
 
That took the gold price in single currency terms up to its strongest since mid-November at €1103 per ounce.
 
The UK gold price in Pounds per ounce traded flat below Friday's 5-week high of £975 as Sterling held firm despite what pro-Brexit, pro-Conservative newspaper The Telegraph called a "chaotic" Cabinet reshuffle of senior ministers by Prime Minister Theresa May.
 
China's benchmark gold price traded overnight back up to $8 per ounce above comparable London quotes, just below the average incentive for new imports to the world's No.1 consumer market. 
 
But with 6 weeks until the Year of the Dog begins, "Chinese New Year demand is yet to pick up as the prices are too hard to swallow," Reuters quotes one trader in Singapore.
 
This close to Lunar New Year 2017, the Shanghai premium was more than 3 times today's level.
Posted: January 8, 2018, 2:45 pm

Gold Prices Set 16-Week Closing High vs. Jobs-Data Hit Dollar, GLD Shrinks

GOLD PRICES rose back above $1320 per ounce versus the falling Dollar in London's wholesale trade on Friday, heading for the highest weekly close in 16 after new data said the United States added far fewer jobs than analysts expected last month.
 
The official non-farm payrolls estimate also put average annual wage growth in December at 2.5%, unchanged from November's pace when inflation was seen at 2.2%.
 
That month's US trade deficit meantime came in today near a 6-year record at almost $50 billion, up 3.2% and wider than analyst forecasts.
 
The Dollar fell hard on the FX market, with the Euro jumping back towards this week's attempt at 3-year highs just below $1.21, while the British Pound also tested last September's multi-month peak.
 
That kept the UK gold price in Pounds per ounce £5 below Thursday's 5-week high at £978.
 
The gold price for Eurozone investors traded below €1095 per ounce, some 1.9% lower from this day last year.
 
The Dollar had already fallen overnight to its lowest level against the Chinese Yuan since September's spike to 18-month lows.
 
So-called "digital asset" Bitcoin today rallied to a 2-week high at $15,900 as competitor "currency" Ethereum extended its rise above $1000, more than tripling from this time 3 months ago.
 
Co-founder of Ripple Chris Larsen is now the fifth richest person in the United States according to data compiled by Forbes, thanks to his "crypto" jumping 10-fold in price in the last 4 weeks alone.
 
Unlike Bitcoin – now down 25% after rising 12-fold in the year to mid-December – Ripple was launched and is controlled by one company, with no technological limit on the number of units in issue.
 
"As investors were consumed with Bitcoin's price action in December," says CNBC, "many missed the longest winning streak ever" in gold-backed vehicle the SPDR Gold Trust (NYSEArca:GLD).
 
The 13-year old exchange-traded gold trust "rallied for 11 straight days before dipping into the red on Wednesday," it says.
 
Investors have failed to buy into the GLD's rally however, analysis by BullionVault shows.
 
Since bottoming at 5-month lows on 12 December, Dollar gold prices have now risen 6.8%.
 
The GLD in contrast has shrunk 0.8% in size as investors liquidated stock, needing 7 tonnes less gold to back the value of its shares outstanding, now near the lowest since mid-September at 836 tonnes.
 
While the gold price ended Thursday 12.9% higher from 12 months ago, the GLD was only 2.7% larger year-on-year.
 
With gold prices this strong, that's the widest gap since April 2012.
 
Chart of Dollar gold price's 12-month % change vs. change in size of GLD
 
Shanghai gold premiums meantime held below $7 per ounce on Friday, more than $2 beneath the average incentive offered for new imports into the world's No.1 gold consumer nation despite next month bringing both Valentine's Day and the annual demand peak of Lunar New Year.
 
"Strong physical demand leading into the Chinese New Year is yet to materialise this year," says Swiss finance and refining group MKS Pamp trader Alex Thorndike to Reuters.
 
"Premiums in Hong Kong were at about 70 cents an ounce, unchanged from last week," the news-wire adds.
 
Platinum prices meantime held near Thursday's new 15-week highs at $966 per ounce even as a new report said sales of diesel cars – which use platinum catalysts to reduce harmful emissions – sank 17% in the UK in 2017.
 
Silver prices also traded near yesterday's peak, holding over 10% higher from mid-December's low against the Dollar – made just as the US Federal Reserve raised its key interest rate for the third time in 2017 – to reach $17.23 per ounce.
 
"Support is at $16.97 – the 200-Day Moving Average," says the latest technical note from bullion bank Scotia Mocatta's New York office, "and momentum indicators are bullish.
 
"Silver appears poised to target the November High at $17.38."
Posted: January 5, 2018, 3:30 pm

Gold Prices Shrug Off Asian Selling as Dollar Drops, Stocks Surge with Commodities

GOLD PRICES popped back to $1315 per ounce Thursday lunchtime in London's wholesale market as new US jobs data saw the Dollar drop and world stock markets rise yet again.
 
New claims for US jobless benefits rose last week, defying analyst forecasts. But ahead of Friday's official jobs estimate for December, the private-sector ADP report said the world's No.1 economy added more jobs than expected last month, with payrolls expanding the most in 9 months.
 
Silver tracked gold prices higher again to test $17.20 per ounce for the third time in 3 days, while commodity prices extended what Bloomberg calls their best-ever run of daily gains and Asian and European stock markets also rose once more.
 
The Euro flirted with 3-year highs against the Dollar above $1.20, holding the gold price for Eurozone investors at €1090 per ounce, some 0.6% below yesterday's 6-week high.
 
The UK gold price in Pounds per ounce extended its straight-line rally from mid-December's 12-month low, trading above £971.
 
Chart of UK gold price in Pounds per ounce. Source: BullionVault
 
Thursday morning's Dollar-price benchmarking in London failed to rise from yesterday, ending gold's strongest run of back-to-back gains since its record run of February 2016.
 
But today's AM auction did find solid demand from wholesale players around $1313 per ounce, just $1 below Wednesday morning's LBMA Gold Price.
 
That was in marked contrast to the heavy selling interest around $1317 at Wednesday afternoon's auction, which then found a balance with demand at $1314.90 – the highest London benchmark price since 15 September.
 
"[After] Chinese banks quickly sold into [Wednesday]'s strength," says a trading note from Swiss refiners MKS Pamp's Asian desk, "further liquidation was seen today for gold as speculators and Chinese traders continued to sell.
 
"Platinum, which was the best performer overnight, was under a lot of pressure from Japanese specs, who were eager sellers given the significant rise over the past week while they have been out [for New Year]."
 
Against the US Dollar platinum fell 1.5% overnight from yesterday's spike to mid-September highs just below $960 per ounce, before recovering that drop in London trade Thursday.
 
Japan's Nikkei stock index meantime leapt 3.3% on its first trading day of 2018, reaching its highest level since 1992.
 
"Unlike snow, Japan's deflationary mindset won't melt easily," said Bank of Japan chief Haruhiko Kuroda in Tokyo today, vowing to maintain "patiently" the central bank's unprecedented QE asset-purchase program.
 
Federal Reserve officials also worried last month "that inflation might stay below [their 2.0% annual] objective for longer than they currently expected," according to minutes from the US central bank's December meeting released yesterday.
 
Choosing to raise Dollar rates to a decade high of 1.5% however, "most participants" said that President Trump's tax reform bill was "a factor that led them to boost their projections of real GDP growth over the next couple of years."
 
"Strong corporate appetite for US Dollars at the end of the year usually means reduced demand for gold," says analysis of commodity positioning by French investment bank Societe Generale, yet speculators grew their bullish betting on gold derivatives in late-December.
 
"Going forward," the note adds, "geopolitical unrest in Iran could continue to provide some support to gold prices in the near term."
 
Iran today accused US President Trump of "grotesque...absurd" interference by tweeting support for the anti-government protests which have now seen 21 killed and been met with arrests and pro-government rallies.
 
Turkey's Foreign Ministry also attacked the US after a New York court found ex-banker Hakan Atilla guilty on 5 counts of helping Iran evade sanctions over its nuclear program using smuggled gold and illegal payments in a trial where one prosecution witness implicated Turkish president Recep Tayyip Erdoğan in the plot.
 
Trump's political colleagues at home meantime defended his Twitter attack on sacked PR guru Steve Bannon, accused by the President of having "lost his mind" after claiming in a new book that meetings between Team Trump and Russian officials amounted to "treason".
Posted: January 4, 2018, 1:58 pm

Gold Price Records 8th Best Run Since 1968 as Stocks Jump into 2018, Mifid II Begins

GOLD PRICES extended their New Year 2018 rally against the Dollar in London on Wednesday morning, rising for the 10th time in 11 trading days.
 
In the last 50 years the Dollar price of gold bullion has beaten such a run only 7 times before.
 
Touching $1321 per ounce in 'spot' trading, physical bullion fixed at $1314.60 in Wednesday's AM London Gold Price auction, the highest benchmark value since mid-September.
 
Since this run began on 14 December physical gold bullion offered for settlement in London has now gained 5.9% in US Dollar terms.
 
Gold was last this strong in February 2016, its best-ever run of day-on-day gains at London's morning benchmarking auction.
 
Chart of LBMA Gold Price, AM benchmarkings, last 12 months. Source: IBA
 
"Gold has reclaimed the 200-day Moving Average [now at $1267]," said a technical analysis from bullion market makers Societe Generale on Tuesday, "and short term it should head towards $1313, [its] September high and the 61.8% retracement of recent down move."
 
Above there, SocGen sees resistance around $1330 and then $1350 – the "neckline of [a bullish] multi-year inverse Head and Shoulders" formation.
 
Silver meantime fixed at $17.125 at midday Wednesday, rising for the 9th time in the last 10 trading days.
 
Its best run since April 2016, that has only been matched or beaten 24 times since 1968.
 
"Momentum indicators are bullish," says a technical note from bullion market-makers Scotia Mocatta's New York office, "as silver appears poised to target the November high" at $17.35 per ounce.
 
World stock markets also continued their New Year 2018 surge following New York's fresh all-time highs overnight.
 
Commodities as a group stalled however, holding little changed overall from Tuesday's new 2-year highs on the Reuters-Jefferies CRB index.
 
On the political front, the regime in North Korea re-opened a telephone line to the democratic government in South Korea for the first time in 2 years as dynastic dictator Kim Jong-un said he'd like to discuss sending athletes to next month's Winter Olympics in Pyeongchang.
 
Responding to Kim's claim that his nuclear arsenal is ready to fire at any time, "I too have a Nuclear Button," tweeted US president Donald Trump, "but my Button works!"
 
The regime in Tehran called for pro-government protests to counter marches and calls across No.5 oil-producer nation Iran for its theocratic leadership to quit over high inflation and worsening living standards.
 
European regulators meantime backtracked on parts of today's new 'Mifid II' rules, granting an extra 30 months for derivatives platforms from base-metal venue the London Metal Exchange to LIFFE, Eurex and Intercontinental Exchange to comply with the new requirements.
 
Directed by the European Union, the raft of new rules due to come into force today aim to protect investors in financial instruments from shares to bonds, derivatives and collective schemes by boosting transparency.
 
"Mifid II is expected to cost the finance industry more than €2.5bn to implement," says the Financial Times, "with the largest banks spending more than €40m each on compliance."
 
While physical property including wholesale bullion is beyond the scope of new regulation, over-cautious interpretation of new regulations by banking compliance departments has been blamed for problems with the London benchmarking auctions since the century-old 'fixings' were replaced by independently administered electronic processes starting in 2014.
Posted: January 3, 2018, 1:50 pm

Gold Bars Gain Further Over $1300 as 2018 Starts 'Risk On', Dollar Falls for New Year

GOLD BARS traded in London's wholesale market rose to 15-week highs above $1300 per ounce against a falling US Dollar as 2018 got underway on Tuesday, rising almost 1% from before New Year.
 
Global stock markets also gained as the Dollar extended last year's 9.8% drop against the world's other leadng currencies – its worst annual fall since 2003 according to Reuters.
 
The price of wholesale gold bars rose 11.9% versus the Dollar in 2017, finishing with the precious metal's highest year-end close since the record peak of 2012 thanks its best year-on-year performance since 2010.
 
Anti-government protests meantime continued across Iran, where the theocratic regime says 22 people have now died since marches and rallies blaming it for high inflation and falling real incomes began a week ago.
 
To mark New Year 2018, the regime in North Korea unveiled a giant ice sculpture of its Hwasong-15 intercontinental ballistic missile, part of the nuclear arsenal leader Kim Jong-un claims can now reach any part of the continental United States.
 
"The US Dollar [is] soggy...[today's] economic data is strong, risk is 'on', investors are looking for yield, and the year won't start until after Friday's December US employment report," says FX analyst Kit Juckes at French investment and bullion market-making bank Societe Generale.
 
Priced in the Dollar, large gold bullion bars meeting the London Good Delivery standards rose above $1313 per ounce on Tuesday, some 6.1% above mid-December's 5-month low.
 
Silver rose less steeply from before New Year, having already touched Tuesday's top at $17.10 on Friday for a 9.4% gain from early December's drop back to July levels.
 
Platinum prices also rose, hitting a 1-month high against the Dollar at $938 to trade 7.4% above mid-December's near 2-year low.
 
Versus China's Yuan, the Dollar meantime fell below ¥6.50 on the forex market, its weakest level against the Chinese currency since August's 14-month low.
 
That saw Shanghai gold premiums, over and above comparable London quotes, begin 2018 some $1.25 below the typical incentive for new imports to the world's No.1 consumer nation of $9 per ounce.
 
"Interest has been fairly muted in Asia over the past few weeks as the premium stayed fairly range bound around $8-$10," says Tuesday's note from Swiss refiners MKS Pamp's Asian team, "although seasonal buying in January ahead of Chinese New Year should provide support in our time zone.
 
"There is very real potential for physical interest to drive the [gold] price even higher throughout January. From here, dips below $1290 should be well supported, while next major resistance stands around $1325-$1330."
 
"[After gold prices] exceeded the technically important 200-day moving average and, a short time later, the 100-day moving average," says a note from the commodities team at Germany's Commerzbank, "this allowed it to rise above the psychologically important $1300 per troy ounce mark again.
 
"Speculative financial investors also played a part in the latest price surge," Commerzbank adds, pointing to positioning data from US regulator the CFTC showing how non-industry traders in Comex gold derivatives grew their net bullish betting "by over 40% since mid-December."
 
Net of their bearish bets, hedge funds and other 'Managed Money' traders under the CFTC categorization grew their bullish positions by 26% in the week-ending Tuesday 26 December.
 
Reaching the notional equivalent of 341 tonnes, that was still one-third smaller than the last 10 years' average.
 
Silver betting in contrast remained negative as of Boxing Day for a third week running, equal to -1,105 tonnes against a 10-year average of +3,992 tonnes.
 
Chart of Managed Money net betting (notional tonnes) on Comex silver futures and options. Source: BullionVault via CFTC
 
Across 2017 as a whole, the giant iShares Silver Trust (NYSEArca:SLV) – the largest silver-backed exchange-traded vehicle – shrank some 6% as shareholders liquidated the stock, needing 9,972 tonnes of bullion to match the value of its shares outstanding.
 
The giant SPDR Gold Trust (NYSEArca:GLD) meantime added 15.3 tonnes of bullion in 2017 to back the value of its shares as investor for the vehicle grew 1.9%.
 
Taking the exchange-traded trust fund's total backing to 837 tonnes, that was barely one-twelfth of the inflow in 2016, when the Brexit referendum and US election saw strong investor demand for gold bars, coins and exchange-traded proxies.
 
On a daily basis, the 1-month correlation between net investor demand for the GLD's shares and the Dollar gold price also weakening, averaging 0.11 in 2017 against 0.38 in 2016 and 0.21 in 2015.
Posted: January 2, 2018, 2:05 pm