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Gold Price Hits 5-Month Aussie High as No.2 Mine Output Forecast to Halve in 40 Years

GOLD PRICE gains of 0.5% from last Friday's finish held firm in London trade today as world stock markets recovered more of this week's drop and commodities also rallied after falling from their recent multi-year highs.
 
Gold held at $1282, some $5 per ounce below Wednesday's attempt at 4-week highs versus the US Dollar.
 
This week's drop in the Dollar's exchange rate against Euros and Yen edged gold prices down 0.5% and 0.2% for European and Japanese investors respectively.
 
The UK gold price in Pounds per ounce today traded 0.5% higher for the week at £971 as Minister for Exiting the European Union David Davis said he's made "compromises" with EU negotiators.
 
Irish Prime Minister Leo Varadkar vowed to block talks on a post-Brexit trade deal if London doesn't explain its plans for the border between Eire and Ulster.
 
Major gold producers Canada and Australia meantime saw gold prices rise sharply this week as their 'commodity' currencies weakened, up 1.1% and 2.1% respectively to 2-week and 5-month highs.
 
"That's even with iron ore higher and copper rallying," says one spread-betting broker.
 
Reaching a 17-year high in 2016, Australia's gold mining output – the second-largest behind China – is set to peak in 2021 according to a new report from specialist consultants MinEx, before halving from current levels by the late 2050s.
 
Projection of Australia's gold mining output to 2057. Source: MinEx
 
A slight decline in world silver output is being offset in 2017 by a rise in scrap recycling "driven largely by higher Asia flows," says Johann Wiebe, lead analyst at Thomson Reuters GFMS.
 
Presenting his latest market review to this week's annual Silver Institute dinner in New York, Wiebe also forecast a 5% fall in global silver demand for 2017.
 
That will give the overall market a small surplus after 4 years of consecutive silver deficits on GFMS's new data.
 
Silver this week doubled the gains in gold prices, rising 1.1% against the Dollar to $17.08 per ounce after closing around $16.88 three weeks running.
 
A small rise in the Chinese currency's Dollar exchange rate earlier saw Yuan gold prices end unchanged on Friday.
 
That cut the premium for metal settled in Shanghai to $7.50 per ounce above comparable London quotes, some $2 below the typical incentive for new imports to the world's No.1 gold consumer nation.
 
Gold prices in No.2 consumer India meantime "flipped" from a $2 premium to a $2 discount this week, reports Reuters, with rising Rupee prices denting demand despite the current Hindu wedding season.
 
"Retail demand is weak, jewellers are not restocking," the newswire quotes a Mumbai bank dealer.
 
"They are waiting for a price correction."
 
Next month's regional elections in Gujarat also mean "the administration is keeping a close vigil on the movement of money" in the wealthy western state, says Haresh Acharya of the Bullion Federation in Ahmedabad, "[and] this has slowed down the movement of gold."
 
Investors in emerging-market bonds last week exited at the fastest pace since New Year, according to consultants EPFR.
 
High-yield bond funds worldwide lost the 3rd largest sum on the data provider's records, says Bloomberg.
 
US junk bond trust fund the SPDR Bloomberg Barclays High Yield Bond ETF was headed today for a small weekly gain after setting fresh 7-month lows on Wednesday.
 
The delinquency rate among so-called "sub-prime" US consumers buying new autos on credit "is rising [thanks to] stagnant wage growth, higher interest rates, rising gasoline prices and falling second hand car values," says a new note from Chinese-owned bullion and commodities bank ICBC Standard.
 
Presenting "a material and rising threat to US auto sales," says ICBC analyst Marcus Garvey, "that carries negative implications for palladium – where US autos account for c.20% of global demand – but positive implications for gold."
 
Weaker consumer borrowing, says Garvey, "could act as a brake on the pace of Fed hikes in 2018."
Posted: November 17, 2017, 1:29 pm

Gold Price Flat as Half-Billion Da Vinci Sale Sees Stocks and Junk Bonds Rally

GOLD PRICES edged back up to $1280 per ounce on Thursday in London as world stock markets rose for the first session in six.
 
With gold prices trading just $10 per ounce above the 13-week closing low of week-ending Friday 3 November, so-called "junk bond" prices also rallied with equities.
 
US corporate bonds rated below investment grade gained 0.7% from yesterday's new 7-month low as measured by the SPDR Bloomberg Barclays High Yield Bond ETF (NYSEArca:JNK).
 
Wednesday night saw a new all-time record set for a work of art sold at auction, when Salvator Mundi -- reputedly by 15th Century Italian Leonardo da Vinci -- fetched $450m at Christie's in New York.
 
The sale had been squeezed into a sale of Post-War & Contemporary Art.
 
"This was a thumping epic triumph of branding and desire over connoisseurship and reality," the New York Times quotes one Manhattan art adviser.
 
Shares in Christies' competitor Sotheby's (NYSE:BID) today rose 2.9%.
 
BID fell almost 90% during the global financial crisis of a decade ago, having sunk previously ahead of the Tech Stock Bubble bursting in early 2000.
 
Sales volumes through the global fine-art market shrank by some 60% over the two years following Tokyo's stockmarket and property crash starting in late 1989.
 
Chart of Sotheby's stock price. Source: Google Finance
 
"Most of the world is well advanced in the economic cycle," says a new report from French investment bank Societe Generale, warning clients that "at the same time, leverage is high, especially on non-financial corporate balance sheets.
 
Should the US Fed continue raising interest rates, it says, a slowdown in economic growth will "put global debt back in the spotlight and have [a] spiralling effect.
 
"Historically [such] periods signalled a bull run for gold and [the stockmarket volatility index] VIX in particular."
 
The Dollar on Thursday held above yesterday's 1-month lows to the Euro currency as new US data showed industrial production in the world's largest economy rising just ahead of forecast in October.
 
Fresh Eurozone data showed a slight slowdown in inflation across the 19-nation currency union at 1.4% per year.
 
British retail sales meantime showed a smaller than expected decline last month from September's jump, helping Sterling to rally and curbing the gold price in UK Pounds per ounce below £970, barely changed for the week so far.
 
"The financial markets are bulging with systemic risk," says the latest quarterly letter from gold-mining fund manager John Hathaway to clients of Tocqueville Asset Management, pointing to "financial-asset valuations at all-time highs" while the size of US government debt now makes "exit from radical monetary policy difficult, if not impossible."
 
"History teaches that resolution of [such] impasses most often results in monetary debasement," says Hathaway.
 
"Gold and silver constitute a short list of non-financial assets with monetary characteristics."
Posted: November 16, 2017, 6:21 pm

Gold Prices Hit 4-Week Dollar High as Stocks Fall from 'Irrational Exuberance'

GOLD PRICES jumped to 4-week highs against a weakening US Dollar in London trade Wednesday lunchtime, reaching $1288 per ounce as world stock markets followed Wall Street lower for the 5th session running.
 
New data today showed US inflation holding at the Federal Reserve's 2.0% annual target in October, while retail sales rose 4.6% from the same month last year.
 
Silver and platinum both reached 1-week highs as the Dollar fell to worse than $1.1850 against the single Eurozone currency, its weakest level in a month.
 
Tuesday in contrast had seen another heavy selling order in Comex gold futures, notes Bloomberg, with "erratic volume" in the derivatives market "going from an oddity to a more regular feature of trading."
 
"Rumours on the market [say] the gold selling may have to do with Venezuela’s national bankruptcy," reports today's daily commodities note from German financial services group Commerzbank, after the crisis-hit Latin American state allowed a swap deal to lapse last month with former bullion bank Deutsche Bank.
 
"Possibly this gold has now been sold after the loans were not serviced," says Commerzbank.
 
A record-high balance of investment managers have meantime been taking "more risk than usual" according to the latest survey from Bank of America Merrill Lynch.
 
Cash holdings amongst managers running $610 billion of assets fell this month to a 4-year low at 4.4%, the survey found.
 
Yet at the same time, a record 48% of the survey's respondents said they believe equity markets are currently "over valued".
 
That disconnect between fund managers' views and behavior points to "irrational exuberance" says BAML's report, using a phrase coined by ex-Federal Reserve chairman Alan Greenspan as the Tech Stock Bubble accelerated in the late 1990s.
 
A separate survey from data and technical analysis service Investors Intelligence put the balance of bullish over bearish investors at the highest level since just before the 1987 'Black Monday' crash at the start of this month.
 
"The recent weakness in US high-yield bond prices [has been] diverging notably from stock prices [setting] new highs," says the latest Global Strategy Weekly from French investment bank Societe Generale strategist Albert Edwards.
 
Within the stockmarket itself, Edwards adds, "there has been a clear divergence in [2017] performance between companies with highly leveraged (bad) balance sheets and those [without]," pointing to a chart from his colleague Andrew Lapthorne.
 
"Is this a straw in the wind that a bear market is arriving far sooner than most investors had anticipated?"
 
Chart of US 'good' vs 'bad' balancesheet companies' 2017 share performance. Source: Societe Generale
 
Amid the military coup against ruler Robert Mugabe's wife becoming his successor in southern African state Zimbabwe meantime, major platinum producer Zimplats said its mines -- "all located some distance" from the capital Harare -- "have continued to operate normally this morning."
 
Accounting for 7.3% of global platinum mine supply over the last 5 years, Zimbabwe holds the world's second-largest unmined reserves of the metal behind No.1 producer South Africa.
 
Data from specialist consultancy SFA (Oxford) forecasts a 9% decline in the country's 2017 output from last year's record.
 
Rising 3.2% so far in 2017, the platinum price has lagged both silver – up 7.6% in US Dollar terms – and gold, now more than 11.5% above its New Year start.
Posted: November 15, 2017, 1:55 pm

Comex Gold Sees 'Another Large Sell' as Bullish Silver Betting Grows to 7-Week High

COMEX GOLD contracts recovered a $5 drop against a weakening US Dollar in London lunchtime trade Tuesday, rising back to last week's finish at $1275 after what analysts called another "large sell" order on the futures market.
 
Commodities retreated and bond prices edged higher as world stock markets fell again.
 
Germany's Dax dropped for the fourth session running after the 19-nation Eurozone released a raft of stronger economic data, led by 2.5% annual GDP growth across the region for the third quarter of the year.
 
"Speculative financial investors stopped withdrawing from gold and built up net long positions again in the week to 7 November," says German financial group Commerzbank in a commodities note today, looking at the latest Comex gold derivatives data from US regulator the CFTC.
 
"They have also been betting more heavily on rising silver prices again of late."
 
Chart of Comex gold vs. silver net spec long positions among Managed Money category of trader. Source: BullionVault via CFTC
 
The net long position in Comex gold derivatives rose 4% in the week-ending last Tuesday, according to the CFTC data, taking it to the notional equivalent of 540 tonnes, some 43% greater than its historic average.
 
Bullish postioning in silver in contrast, net of money managers' bearish bets, saw a 13% jump, taking it to a 7-week high notionally equivalent to 10,180 tonnes, fully 165% greater than the average size since current data began in 2006.
 
In Dollar terms, that made the "net spec long" in silver worth over 25% of the equivalent net betting on gold, its largest level since April and one-third larger than the historic average.
 
In the physical market, "China were light buyers [of gold Monday]," says today's trading note from MKS Pamp, the Swiss refinery group, reporting the Shanghai premium over quotes for London settlement at $8 per ounce, in line with typical levels.
 
"London came in on the bid...[and New York] tried to push the yellow metal through $1280 on several occasions but heavy offers on Comex capped the market."
 
Silver prices meantime "managed to recoup the 17 handle," says MKS, "finding near term support at the 100-day Moving Average" according to a technical analysis from bullion clearers and market-maker Scotia Mocatta's New York team.
 
"[But] the metal remains locked between $17.18, the 200-day MA," says Scotia, "and $16.77, the 23.6% Fibo retracement level of the Sep-Oct decline."
 
On the FX market Tuesday, Tthe Dollar fell to 3-week lows against the single currency at worse than $1.17 per Euro.
 
That helped drive the gold price for Euro investors down below EUR1085 per ounce, its cheapest level since 26 October.
 
The UK gold price in Pounds per ounce meantime held tight around £972 as Sterling recovered a half-cent drop on the FX markets following news that consumer-price inflation held last month at a 5-year high of 3.0% per annum.
 
The Bank of England this month raised its key interest rate to 0.5% after it holding it at 0.25% for almost nine years.
 
Posted: November 14, 2017, 1:10 pm

Gold Prices Bounce from Comex Sell-Off as Fed Looks to 3x Rate Hikes in 2018

GOLD PRICES traded in a narrow $5 range above last week's close on Monday morning in London as expectations held firm for a US Fed rate hike next month and the British Pound dropped amid fresh doubts over Prime Minister Theresa May's leadership, writes Steffen Grosshauser at BullionVault.
 
Gold prices climbed to $1279 per ounce after posting its biggest daily decline in three weeks in Friday's session, falling below the 100-day moving average as the US Comex futures and options exchange saw heavy selling concentrated in 10 minutes.
 
Monday's bounce in non-yielding bullion prices were limited, however, against a strengthening US Dollar and a further rise in the rate of return offered by US Treasury bonds.
 
Market expectations now see a 96.7% certainty of a Federal Reserve rate rise to a ceiling of 1.50% at the meeting 1 month from today, up from 82.7% this time in October.
 
Chart of futures market betting on December 2017 US Fed meeting outcome. Source: CME FedWatch
 
"A higher yield tends to increase the cost to carry gold, and we had a little uptick in the yield curve slope," says Bart Melek, head of commodity research at Toronto Dominion Bank.
 
Philadelphia Fed President Patrick Harker meantime said today he expects the US central bank to raise rates at their meeting next month, with a further 3 increases likely next year unless inflation in the cost of living retreats. 
 
US lawmakers said over the weekend that President Trump's tax-cut proposals face heavy debate and challenges between now and the New Year.
 
"We don't see much movement in gold prices in the next one or two months," reckons Richard Xu, a fund manager at China's biggest gold exchange-traded fund HuaAn Gold.
 
"In lieu of major developments, it is difficult to see gold finding the support necessary for a move back toward $1300 over the near-term," agrees Swiss refiner MKS Pamp's trader Sam Laughlin.
 
Gold for UK investors rallied by £10 on Monday, back towards last Wednesday's 3-week highs at £980 per ounce, as Sterling was battered by nearly 1% on the currency market after The Sunday Times reported that 40 members of Parliament from Prime Minister Theresa May's Conservative Party have agreed to sign a letter of no-confidence in her ability to push for the Brexit deal she has proposed.
 
While the Pound's weakness supported Britain's FTSE100 Index, the vast majority of Asian and European indices dropped on Monday, with the pan-European STOXX 600 benchmark led down by heavy losses in energy provider EDF. 
 
Brent crude oil stayed near a 2-year high buffeted between further tensions in the Middle East and reports of rising US production. 
 
Silver showed low trading volumes on Monday but stayed above Friday's close at $16.88. Trading in platinum and palladium also remained subdued throughout the morning with palladium oscillating around the $1000 level through which it slipped last Friday. 
 
Bitcoin, the original crypto-currency, meanwhile slightly recovered after slumping more than 25% in the previous 4 days amid concerns over the cancellation of a software upgrade.
Posted: November 13, 2017, 2:16 pm

Gold Prices +1.1% for Week Even as Real US Rates Rise Amid Junk Bond Sell-Off, Saudi Tensions

GOLD PRICES slipped but held 1.1% higher from last Friday's 13-week closing low in Dollar terms today as world equities followed Wall Street further below the stock market's recent all-time highs.
 
Silver held the same weekly gain at $17.02 per ounce, while platinum prices traded 1.7% higher from last Friday above $936.
 
Crude oil held near this week's 2-year highs as France's president Emmanuel Macron made an unscheduled visit to Saudi Arabia, which has now -- amid the "purge" of new crown prince Mohammed Bin Salman's rivals -- ordered its citizens to leave Lebanon, suggesting an attack against Iran-backed Hezbollah may be imminent.
 
The Euro touched 1-week highs above $1.1660 on the FX market, cutting gold's weekly gain for Eurozone investors to 0.9% after it reached the highest price since mid-September on Wednesday at EUR 1110 per ounce.
 
Betting on next month's Federal Reserve decision on US interest rates meantime sees zero chance of "no change" -- down from a likelihood of 12.2% this time last month -- with the consensus continuing to expect a 0.25 point rise in rates to a ceiling of 1.50% on 13 December.
 
The likelihood of a shock 0.5 percentage point hike however -- up to a ceiling of 1.75% -- has jumped from zero to 8.5% according to the CME's FedWatch tool.
 
"Based on the previous relationship between the price of gold and expectations for US interest rates," said a report last week from UK consultancy Capital Economics, "the yellow metal is set for a big fall."
 
"[But] gold [is currently] ignoring a slight firming in US real 10-year rates," notes John Reade, chief market strategist at the mining-backed World Gold Council.
 
 
Adjusting for market-based inflation expectations, 10-year US Treasury bond yields have shown a strong inverse relationship with Dollar gold prices over the last 15 years, reaching a record strong 5-week average of rolling 5-week correlations at -0.963 this time last month.
 
 
Chart of real 10-over-10 US T-bond yields vs. Dollar gold prices, week-ending Friday. Source: St.Louis Fed
 
With 10-year US Treasury yields rising from 2.34% to 2.37% this week, borrowing costs for lowly-rated US corporate borrowers have risen more sharply still, reports the Financial Times.
 
The price of so-called "junk bonds" fell yesterday to 7-month lows as tracked by trust-fund ETF investment products.
 
"Looking like JNK was right. Per usual," said fund manager Jeff Gundlach of $109bn asset managers Doubleline yesterday, answering his own earlier tweet asking how the junk-bond ETF could drop in price 6 days in a row while the S&P500 index of US equities rose 5 times to yet another all-time record high.
 
"We absolutely do have concerns over Asia junk bonds," Bloomberg today quotes ANZ Bank credit strategist Owen Gallimore in Singapore, also pointing to the sell-off in sub-investment grade US debt.
 
"We are underweight Asia high yield as valuations look frothy."
Posted: November 10, 2017, 1:44 pm

12-Month Demand to Buy Gold Sub-4,000 Tonnes 1st Time Since 2010, Mine Supply 10% Larger

BUY GOLD prices traded at 3-week highs and more against all major currencies outside the Japanese Yen on Thursday, rising despite new data showing the weakest 12-monthly gold demand since early 2010.
 
Global gold buying demand fell below 4,000 tonnes between October 2016 and September this year, with global gold mining output larger by almost one-tenth.
 
Western stock markets fell again, as did Western government bonds -- pushing longer-term borrowing costs higher -- while most industrial commodities held flat near their recent multi-year highs.
 
Trading up to $1287 per ounce, gold priced in Dollars moved 1.4% higher from last Friday's finish, its lowest weekly close in 13.
 
Platinum prices also rose to fresh 3-week highs against the Dollar just shy of $940, but silver in contrast held 0.8% below Monday's 3-week high of $17.25 per ounce, 
 
July to September "was a tough quarter for gold demand," said Alistair Hewitt, Head of Market Intelligence at the mining-backed World Gold Council today, reporting global demand to buy gold down 9% from the same quarter last year and the lowest quarterly total since Q3 2009.
 
Prices to buy gold averaged $180 per ounce less that quarter than they did in Q3 this year.
 
Contrasting with the first year-on-year growth in 11 calendar quarters for China's gold buying, "India was coming to terms with GST [sales tax] and anti-money laundering regulations," Hewitt explained.
 
"Although we saw ETF [trust-fund investment] inflows... they were significantly lower than last year."
 
All told, the World Gold Council's data show, global gold buying in the 12 months ending 30 September fell 11% from a year earlier, dropping below 4,000 tonnes for the first time since spring 2010.
 
Global gold mining output was 9.8% larger according to that same report.
 
Chart of global gold demand, rolling 4-quarter total. Source: BullionVault via World Gold Council's Gold Demand Trends reports
 
"Political risk from the North Korea threat and other issues have been supportive for gold," says South African investment bank Investec, "but if underlying demand is weak and political risks recede then the metal could face a correction."
 
Across the Middle East, gold demand in Iran rose again and Turkey's private-investment buying almost tripled on a drop in Lira gold prices, says the World Gold Council's report.
 
But next year's addition of 5% sales tax in Saudi Arabia and the UAE means demand "is likely to falter" in the region's key hubs, it goes on.
 
Equity markets across the Arabian Gulf ended Wednesday $7 billion lighter in market capitalization from before last weekend's sudden purge and detention of political and royal rivals to new crown prince Mohammed Bin Salman.
 
"We want a vibrant trade relationship with China," said US president Donald Trump after two hours of talks with Beijing leader Xi Jinping this morning.
 
"[But] we also want a fair and reciprocal one."
 
With Brussels' economists now forecasting that GDP growth in the UK will trail the rest of Europe as it exits the European Union in 2019, the EU's chief negotiator Michel Barnier today gave London 3 weeks to confirm its "divorce settlement" offer or lose the opportunity to start post-Brexit trade talks next month as planned.
 
A poll of real estate surveyors today said house prices are falling across the UK, not just in London.
 
Hit by a wave of ministerial scandals, the UK Government meantime said it will extend £2 billion of trade credit to Saudi Aramco -- the world's largest oil business, which is now considering London's stock market against New York, Tokyo and Hong Kong for a 2018 listing.
 
"A further lurch in descent to mercantilism," said one former senior civil servant.
 
Posted: November 9, 2017, 2:16 pm

Gold Price +0.9%, Silver Investment 'Weak' as $300m 'Kill' Hits Crypto

GOLD PRICE gains of 0.9% for the week so far held firm in London trade Wednesday as world stock markets flat-lined with bonds and commodities, and news spread that hundreds of millions of dollars held in crypto-currency Ethereum have been potentially lost by a developer "error".
 
Between $150-300 million-worth of crypto-currency was either frozen or destroyed late Monday – depending on whose analysis you read – after a self-declared "newbie" made what they claimed was an honest mistake to "kill" a library of transaction records.
 
The crisis was enabled, according to other coders today, by "a simple bug...a logic flaw" in a fix previously deployed by developers using the Ethereum blockchain.
 
Having lost and recovered 6% of its Dollar price last Thursday, Ethereum dropped and recovered almost 4% of its price overnight today, but continued to hold one-quarter below mid-June's current all-time peak at $400.
 
Leading crypto-currency Bitcoin meantime rose within $100 of Sunday's fresh all-time record high above $7,500 per unit – a 10-fold gain for 2017 to date.
 
The number of internet searches for the phrase "buy bitcoin" has now outnumbered "buy gold" searches worldwide in English on 18 of the last 30 days, according to data from Google Trends.
 
Search volumes for "buy bitcoin" first overtook "buy silver" in February, and have held almost 6 times greater so far in November.
 
"US silver coin and bar demand this year is set for the lowest total since 2010," says the latest weekly analysis from specialists Metals Focus, calling the sector "exceptionally weak [with] no sign of a turnaround."
 
Silver prices today held above $17 per ounce, leaving its ratio to gold little changed at 75 per one ounce of the dearer precious metal.
 
Chart of US silver investment demand, annual totals 2010-2017. Source: Metals Focus
 
Silver investment demand in "India is also on course for a weaker performance this year," Metals Focus goes on, "albeit not as pronounced."
 
India's gold bullion imports are likely to total just 175 tonnes during the fourth quarter of 2017 reckons senior analyst Sudheesh Nambiath at Thomson Reuters GFMS, down over 25% from Q4 2016.
 
Gold's balance of supply and demand "[is] showing that gold prices should fall into 2018," reckons Singapore bank OCBC analyst Barnabas Gan, but "geopolitical events could cloud the fundamentals."
 
Landing in China to meet President Xi and discuss North Korea's missile tests, "You cannot support, you cannot supply, you cannot accept," said US president Trump overnight, asking "every nation, including China and Russia" to apply the United Nations' resolutions against the Pyongyang regime.
 
"We encourage the UN and international partners to take necessary action to hold the Iranian regime accountable," said US ambassador to the UN Nikki Haley on Tuesday about the Yemen-launched missile aimed at Saudi Arabia – now in the midst of a purge by new crown prince Mohammed Bin Salman of political, financial and royal rivals.
 
The finance minister of Spain, Alfonso Dastis, meantime said today that constitutional changes could allow legal independence referendums by the country's regions.
 
"We have created a committee in parliament to explore the possibility," Dastis told the BBC.
 
This follows the illegal vote and declaration of secession last month by the parliament of Catalonia, where unions have ignored separatist calls for a general strike and fresh regional elections are now due on 21 December.
 
Gold prices in Euro terms today rose back to 3-week highs at €1105 per ounce, some 5% above July's 18-month lows.
Posted: November 8, 2017, 2:20 pm

Rising Gold Prices Lag Crude Oil as Saudis Accuse Iran of War, Equities Rise with Bitcoin

GOLD PRICES held most of yesterday's 1.0% jump against the Dollar and touched new 3-week highs for Euro investors on Tuesday, trading higher as crude oil rose and Saudi Arabia accused Iran of "direct military aggression" tantamount to a declaration of war.
 
Wall Street's S&P500 index of US stocks ended Monday with its 11th new record closing high in a month.
 
Crypto-currency Bitcoin today rallied to regain half of Monday's 6% drop, trading back above $7000 after hitting 5 new daily all-time highs in succession last week.
 
Crude oil spiked Tuesday to new 2.5-year highs, while Arabian stock markets fell hard -- down over 3% -- as news broke of further detentions and sanctions against senior Saudi figures by new crown prince Mohammed Bin Salman.
 
"We expected to some interest in gold following the close above $1280," says one Asian trading desk in a gold price note, "[but] Chinese selling appears to be capping the market."
 
"Stocks are at record highs, so you don't need gold," says George Gero at the wealth management division of Canada's RBC.
 
"Gold will turn around when equities start to correct."
 
Comex gold futures and options have over the last 6 weeks seen their longest streak of speculative liquidation since Donald Trump won the US presidency this time last year, according to positioning data compiled by US regulators the CFTC.
 
Touching $64 per barrel overnight, Brent crude oil today reached its most expensive value against gold bullion since July 2015 at 20 barrels per ounce.
 
Chart of gold priced in barrels of Brent crude oil per ounce. Source: St.Louis Fed
 
"The involvement of Iran in supplying missiles to the [Yemen rebel] Houthis is a direct military aggression," the Saudi news agency last night quoted Crown Prince Mohammed Bin Salman, adding that yesterday's missile launch "may [therefore] be considered an act of war against the Kingdom."
 
After a helicopter crash killed a senior Saudi prince yesterday, a Saudi Royal Court release today mourned without explanation the death of 44-year old Prince Aziz, youngest son of King Fahd, who had reportedly been arrested in Sunday's purge.
 
Asian stock markets rose and European equities held flat as bond yields edged lower.
 
Gold prices traded at $1277 per ounce and touched EUR1105 as the start of US trading approached.
 
"Brent crude is reclaiming the decadal trend line," says a technical note from analysts at French investment bank Societe Generale, "extending its up move [and] finally crossing beyond [that] upward trend line drawn since 1998."
 
This "breakout" has also seen bullish betting by speculative traders jump to a 6-year high, SocGen notes, supporting the new "upside momentum" in energy costs.
 
New data from China's central bank meantime said Tuesday that it failed to grow the country's national gold reserves for the 12th month in succession, even as total FX reserves rose for the 9th month running to reach $3.1 trillion.
 
No.2 gold consumer nation India has seen household demand for the metal fall 25% since last November's shock demonetisation of larger bank notes, the Economic Times reports today, citing a trade association estimate.
 
Stockmarket-listed jewelry giant Titan Co, in contrast, expects its sales to show a 25% rise this financial year, driven by demonetisation and other anti-black market measures hitting India's smaller, informal and traditional family-run artisan jewelers.
Posted: November 7, 2017, 1:32 pm

Gold Prices Rally Near 3-Month Lows Amid Saudi Purge and Yemen Attack

GOLD PRICES rose in all major currencies outside a rallying British Pound on Monday, gaining as crude oil hit 2-year highs amid political turmoil and violence in the Middle East.
 
Gold prices rallied back to $1272 per ounce as oil futures rose to their highest Dollar price since mid-2015, breaching $62 per barrel of Brent crude after the weekend's "purge" and detention by new crown prince Mohammed Bin Salman of numerous Saudi princes, senior ministers and high-profile figures including Al-Waleed bin Talal.
 
One of the world's top 50 richest people according to Forbes magazine, Al-Waleed is reportedly one of the largest individual shareholders in US finance giant Citigroup (NYSE:C), as well as tech giant Apple (Nasdaq:AAPL) and social media site Twitter (NYSE:TWTR). 
 
Iran-backed Hezbollah today accused Saudi Arabia of "imposing" its will on the Middle East through Saturday's resignation of Lebanon's prime minister Nasrallah Hariri.
 
Saudi forces meantime launched their "worst [yet]" attack on anti-government, Iran-backed Houthi rebels in the Sanaa province of neighboring Yemen – from where a missile was fired at Saudi capital Riyadh this morning.
 
Asian and European stock market recovered early losses and US equities also traded unchanged near Friday's fresh all-time record highs on the Dow, S&P and Nasdaq indices.
 
After consumer sentiment in the Eurozone was last week reported rising back to its peaks of the 2001 Tech Stock and 2007 global banking bubbles, the monthly Sentix survey today said investor sentiment towards the German economy has never been higher.
 
Last week's fall towards 3-month lows in the gold price saw speculators in US Comex futures and options cut their bullish bets, net of bearish positions, to the smallest size in 12 weeks.
 
However, that net speculative long position amongst the 'Managed Money' category held 37% above its historic average.
Chart of 'Managed Money' category's net spec' long in Comex gold futures and options. Source: BullionVault via CFTC
 
Silver positioning also retreated on the latest data, down to a 3-week low but still 134% above its historic average.
 
Silver today outran the small rise in gold prices, gaining 0.8% by late afternoon in London to trade at $17 per ounce – a level beaten only 6 times in the last 5 months.
 
Platinum also outpaced the gains in gold prices, trading up to $921 and gaining almost $100 per ounce from January's 14-year lows against the US Dollar.
 
"Platinum demand for [diesel auto] catalysts fell 20% from 2007 to 2016," reports Japan's Nikkei newspaper today, contrasting with a 50% rise in demand for palladium - primarily used in catalysts to clean emissions from gasoline engines.
 
Demand for platinum jewelry in No.1 consumer market China "has declined sharply since Xi Jinping's regime implemented its anti-extravagance campaign," the paper quotes Bruce Ikemizu at bullion and commodities bank ICBC Standard in Tokyo.
 
Sales of new vehicles in the UK fell 12% last month from a year earlier, new data said today, with sales of diesel cars falling by one-third.
 
Meantime in Brussels, Catalonia's "rebel" ex-governor and colleagues were told today they have to attend court on 17 November to hear Spain's extradition request to the Belgian authorities.
 
"This is not just about Catalonia. This is about democracy itself," claims Carles Puigdemont today in the UK's left-leaning Guardian newspaper.
 
Shanghai gold premiums today rose above $10 per ounce, just ahead of the historical average, as gold slipped more than the Chinese Yuan against the US Dollar.
 
"[This] physical interest out of the Far East soon provided the impetus for a leg higher" in Dollar prices, says the Asian trading desk of Swiss refiners MKS Pamp.
 
"Gold will be looking to interest broadly between $1265-1270 to restrict further downside moves, with further interest at the 200 [day moving average] around $1262."
 
Golfing and dining with Japanese leader Shinzo Abe in what US and Chinese media have dubbed a "bro-mance", Donald Trump allegedly said Japan should have shot down North Korea's missile tests when they passed overhead earlier this year.
 
Pyongyang launched the first of this year's missile tests when Trump and Abe previously met at Trump's Mar-a-Largo resort in Florida.

 

Posted: November 6, 2017, 4:02 pm