DAILY PRICES
Today’s Gold Prices: USD 1106.35, EUR 980.85 and GBP 716.87 per ounce.
Yesterday’s Gold Prices: USD 1107.75, EUR 989.73 and GBP 720.32 per ounce.
(LBMA AM)
Gold rose 0.7% on the COMEX yesterday and rebounded from a one month low. The most active gold contract for December delivery gained $7.30, or nearly 0.7 percent, to settle at $1,109.30 per ounce. Gold rebounded on what appears to have been short covering and a bit of safe haven buying.
Gold in USD – 1 Week
Falling European equities indices likely supported gold and gave a safe haven bid. Yesterday, the FTSE 100 Index, fell 1.2 percent, while French stock market benchmark index CAC 40 was also down 1.46 percent. Asian share were mixed but mostly marginally down overnight and European shares are marginally lower again this morning.
Gold in Singapore was marginally lower and in early European trading gold remained under pressure. Silver, platinum and palladium are all also a bit weaker, with palladium the biggest faller, down 1.2% today.
Still gold is currently set for a third straight week of marginal losses. Unless, we rally sharply before the end of the day, gold is set for a 1.2% fall this week. Silver conversely is higher this week and is up nearly 1%.
Palladium, which Russia has a near monopoly in terms of production, is outperforming, however, on a weekly basis, with a gain of 1.6% this week. Platinum's down 1.2% for the week.
Global demand for coins and bars remains robust and this is especially the case in China. One such indication of that demand is that yesterday, the Hong Kong CME contract saw the highest daily withdrawals of gold kilo bars from the exchange at 19.178 tonnes.
Another indication is the massive Chinese gold bullion imports from the United Kingdom have seen a significant uptick this year. In the first half of 2015 they are at a whopping 112 tonnes, compared to 110 tonnes for the full year in 2014.
This very significant increase likely reflects increased official Chinese demand. The PBOC is continuing to build its gold reserves in a bid to rival the near 8,500 metric tonnes that the U.S. is believed to have. The PBOC announced another increase to their reserves this week and they now stand at 1,693 metric tonnes - less than 20% of the reputed U.S.’ reserves.
Bullion buyers expect higher prices due to a combination of geopolitical, macroeconomic and monetary risk.
The Middle East is increasingly volatile and we appear to on the brink of a war in the region. This comes at a time of deep tensions with an increasingly assertive Russia.
Geopolitical risk remains high given increasing chaos in much of the Middle East and rising tensions between NATO and Russia. Russian forces have joined military operations supporting government troops in Syria, Reuters reports and today come reports from media in Israel that Iranian troops have joined their Russian counterparts.
Turkish warplanes bombed Kurdistan Workers Party (PKK) targets in northern Iraq overnight, a security source told Reuters this morning. This is the latest in a series of daily air strikes on the militants as conflict surges in southeast Turkey, Iraq and much of the Middle East.
A further deterioration in the situation in the Middle East including western powers bombing Syria and a likely Russian military response - would likely lead to a sharp escalation in safe haven gold buying.
There is also the ongoing risk of terrorism. Were ISIS to launch a terrorist spectacular on western soil, it could be expected to come on the anniversary of September 11th, 2001. The ‘911’ anniversary is today.
Given the confluence of still elevated geopolitical, systemic and monetary risks, we are bullish as we enter the seasonal 'sweet spot' for gold in the autumn period prior to Indian festivals and Chinese New Year.
Gold looks to be in the process of bottoming and while the technicals remain quite weak, the fundamentals - of an uncertain global economy, volatile and vulnerable stock markets and robust global demand for gold, particularly from China - are quite positive.
IMPORTANT NEWS
Gold snaps a 10-session string of losses – MarketWatch
“Bullion buyers expect higher prices due to a combination of geopolitical, macroeconomic and monetary risk” – MarketWatch
Gold and Oil Back in Favor as Commodity Funds See First Flows in 6 Months – Bloomberg
LME says in talks on launch of precious metals derivatives – Reuters
Iranian troops join Russians in Syria fighting – Yedioth Internet
IMPORTANT COMMENTARY
Brazil reduced to junk as BRICs facade crumbles – The Telegraph
It is in Warsaw not Athens that the march of the euro will be halted – The Telegraph
Precious metals – Keep holding gold – Money Week
Silver Price Forecast: Rush to Physical Silver Indicates System is On the Verge of Economic Collapse – Profit Confidential
QE4 is coming warns ‘Dr. Doom’ Marc Faber so buy gold! – Arabian Money
Read More News and Commentary [15]