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

Thursday, April 9, 2015 8:45

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Adrian Ash is head of research at BullionVault, the world-leading gold trading & ownership service online…

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.

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the mining-sector’s World Gold Council research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Source: https://www.bullionvault.com/gold-news/silver-prices-040920152

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