Gold Prices Broke Range After a Week of Lateral Trading, First Day of the London Silver Price

GOLD PRICES still lacked direction Friday morning in London at $1315.15 per ounce, 0.4% from last week’s close, as Asian stock markets rose overnight on expectations of European Central Bank easing policy decisions, followed by European equities.

At 1PM BST, gold plunged under $1300 per ounce and was on track for a weekly loss of at least 1%. The same happened to gold prices in Euros and in GBP. Silver tracked gold prices and was set for a weekly drop of more than 1.6% in Dollar terms.

Bonds were also on track for weekly gain on loose policy and Brent crude oil stayed mainly flat at $102.13.

EU ministers meantime discussed arming Kurds in Iraq as Russian army vehicles and tanks approached the Ukrainian border.

Meanwhile, the Euro versus the Dollar stayed below $1.3400 Friday morning, unable to successfully hold to this level this week.

Swiss precious metals refinery group MKS sees gold prices in a range of $1305-1320 being capped by “selling pressure from producers and fast money profit takers.”

“While technical indicators are holding gold firm, other market forces we believe should continue to cap upside,” adds Standard Bank in its commodity daily note.

Gold spent the week range-bound but traded firmly “amid soft economic data support” said an analyst in Singapore.

Q2 UK GDP stayed flat on the month and was slightly higher than expected on the year, a shown by data published Friday. In contrast, the two European economic powerhouses saw their GDP fall in the second quarter of 2014, stalling the economic recovery of the single currency zone.

Gold in Euros and Pounds Sterling, as in Dollars, slightly gained on the week so far (0.6% and 0.7% respectively) trading at €982.74 and £786.60 per ounce on Friday morning.
Pointing at directionless prices, “at the end of this trading week, gold remains impervious to events on the financial markets and to the various geopolitical crises,” concludes Commerzbank in Frankfurt, “and is still trading at around $1,310 a troy ounce.”

The latest London silver price fixing took place yesterday and while investors waited impatiently for its replacement, no important volatility was reported this week. Today saw the first use of the new silver electronic-pricing method set to offer more transparency for price discovery.

The London Silver Price (LSP) following the new electronic-led auction was on the LBMA website at $19.86 per ounce Friday, in line with previous silver price fixings this week.

Silver traded laterally this week before the plunge of early Friday afternoon. This week, silver prices failed to hold on to the $20.00 per ounce level.

Gold demand in Q2 2014 was lower than during the same period last year. “Global gold market continues to recalibrate in 2014 in line with its longer term trend,” said World Gold Council Managing Director, Investment Strategy Marcus Grubb commenting on the Gold Demand Trends report released Thursday.

Institutional demand rose 28% on the Q2 2013 level, with 118 tonnes purchased by central banks on the second quarter of 2014.

Weakness of the jewellery demand mainly came from the number one and two world gold consumers, China and India.

The holdings for the giant Gold ETF, the SPDR Gold Trust (NYSEArca: GLD), remained almost unchanged on the week. June and July saw net inflows into general ETF holdings.

According to the Gold Demand Trends report, ETF outflows so far this year have not reached the level of 2013. Net reductions in H1 2013 were measured at 580 tonnes while the ETF holdings only shed 42.5 tonnes of gold over the first half of 2014.