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Gold Prices Firm, Silver Jumps Again as Odds of Fed Rate Hike Slashed by Weak US Jobs Data

Monday, October 5, 2015 6:46

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

GOLD PRICES eased but held 90% of Friday’s $30 jump in London trade Monday, sitting above $1135 per ounce as world stock markets extended the strong rebound in New York equities following last week’s surprisingly weak US jobs data.

Japan’s Nikkei added 1.8% and France’s CAC40 rose 3.5%, while silver jumped ahead of gold prices again, adding another 35 cents to Friday’s sudden 80c move to reach 6-week highs above $15.60 per ounce.

“The Fed’s credibility is at stake if it fails to move on interest rates this year,” says Mitsubishi Corp’s precious metals analyst Jonathan Butler, noting that the US central bank has “spent the past two years preparing the markets.

“As such, Q4 could be a difficult one for precious metals if rate rises are priced in.”

The chances of a US rate hike by December “have dwindled”, says French investment bank and bullion market maker Societe Generale, now putting the odds of a delay until March 2016 at 50-50.

But for gold prices – and with traders in No.1 consumer market China on holiday until Thursday – “physical demand has been muted so far,” SocGen goes on.

“The mood is rather to sell into price-strength until the broader sentiment towards gold improves.”

Gold shipments into India’s western state of Gujarat fell 80% last month from September 2014, the Times of India reports.

US bond traders now price the odds of an October “lift off” from zero at just 1-in-10, Bloomberg News says, citing futures market positioning.

Former US House speaker Stan Collender now sees a 50% chance of a government shutdown in December – such as happened in late 2013 – when the current stop-gap agreement over the debt ceiling expires.

The US Fed lacked the tools to prevent the financial crisis starting in 2007, several senior members told a weekend conference in Boston about “macroprudential monetary policy”, and the central bank remains “a long way from being able to successfully use such tools” today.

More banking executives “should have gone to jail”, former US Fed chair Ben Bernanke told USAToday on Monday, blaming them for causing what it calls the Great Recession of 2008-2011.

The UK’s Financial Conduct Authority – the only regulator so far to identify and fine a bullion bank for ‘control weaknesses’ inviting a member of staff to try and rig gold prices – now regulates three times as many companies as it did before the crash, an FCA member told a meeting entitled “regulation and responsibility” on the fringes of governing political party the Conservatives’ annual conference in Manchester this morning.

Looking at today’s gold price charts, “From a technical perspective,” says a note from ICBC Standard Bank’s commodities team, “Friday’s bounce slowed the downward momentum in gold but a close above $1148 is needed to turn the outlook more positive.

“A move up through $1160 would break a weekly downtrend stretching back to mid-2012 and open the way to $1200.”

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/gold-silver-100520151

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