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Gold Price Flips at $1080 as Fed 'Set On Hike', Eurozone Vows to Inflate, India's Gold Bond Scheme Launch Fails

Friday, November 20, 2015 9:01

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

GOLD PRICES edged back after recovering last week’s finish late Friday in London, trading 1.3% above Tuesday’s near 6-year low at $1065 per ounce as Western stock markets rose with the Dollar following fresh hints from US Fed policy-makers that a December interest-rate rise is a foregone conclusion.

“We have done everything we can to avoid surprising the markets…when we move,” said the US central bank’s vice-chair Stanley Fischer at a conference in San Francisco, while Atlanta Fed president Dennis Lockhart said he’s now “comfortable with moving off zero soon,” but the path of further hikes will likely prove “slow [and] halting.”

In contrast the Fed, Eurozone monetary policy will become easier still said ECB president Mario Draghi in a speech Friday, vowing to do “what we must” to raise the near-zero rate of inflation.

Bullion flipped back below $1080 – a key technical gold price level according to some analysts – while silver headed for a 0.5% weekly drop at $14.18 per ounce.

“Finding support from a somewhat weaker US Dollar [overnight] precious metal prices have been recovering since yesterday,” notes German bank Commerzbank.

“Candle charts suggest…we have entered [a] corrective cycle after our long $1090 to $1066 down move,” said a technical analysis from bullion bank Scotia Mocatta overnight, pointing to $1095 and $1114 as near-term targets.

“As the market moves into a corrective phase,” agreed the Asian dealing desk at Swiss refiner and finance group MKS this morning, “it’s likely gold will test top-side targets of $1095-1100 [but] further resistance sits around $1110.”

Chinese gold prices rose again Friday on the Shanghai Gold Exchange, adding another 0.8% to a 3-day high and holding a firm $3.60 per ounce premium above London quotes.

China state broadcaster CCTV today reported the release of new gold bars marking 2016 as the Year of the Monkey on the Chinese zodiac.

New customs data from Switzerland – the world’s No.1 gold bar refining center – show October was the strongest month in 7 for gold exports direct to China, notes Commerzbank, while shipments to Hong Kong slipped but held “solid”.

“By contrast,” the bank’s commodities team go on, “exports to India totalled a mere 21.5 tons…a surprisingly low figure given the high religious festivals of Dhanteras and Diwali in

November, which are generally accompanied by high gold demand.”

With the Diwali festival now being followed by India’s key wedding season for gold gifting, the BJP government of Narendra Modi’s new scheme to “unlock” some of the sub-continent’s estimated 20,000 tonnes of existing private gold holdings – and use them to meet future demand, reducing the need for imports – has so far gathered less than half-a-kilo according to Finance Ministry sources speaking to the Wall Street Journal.

New Delhi’s other gold initiative – a Sovereign Bond paying 2.75% annual interest while tracking the Rupee gold price – meantime closed its first offering today with some INR145 crore raised from private savers ($22 million) according to Financial Express.

At current rates, that means the scheme launched two weeks ago has deterred some 633 kilograms of gold investment.

India’s gold bar and coin demand last year totaled 207 tonnes according to data compiled by specialist analysts Metals Focus for market-development organization the World Gold Council – an average fortnightly pace of almost 8 tonnes.

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-price-112020153

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