London Gold Market Report
from Adrian Ash
BullionVault
Friday 23 Nov, 08:25 EST
The DOLLAR PRICE of physical gold rose back to $1734 per ounce in London on Friday morning, nearing the top of the last 5 weeks’ trading range as so-called “risk assets” also crept higher.
Asian and European stock markets were slightly stronger, while the single Euro currency pushed back above $1.29.
Commodity prices added 0.5% on the broad GSCI index. Silver touched its best Dollar-price in 6 weeks above $33.50 per ounce.
“Activity is muted,” said one London dealer, with US markets due to re-open but many traders extending the Thanksgiving holiday.
“[The gold price] is stuck between $1715 and $1740 area for now,” Reuters quotes Ronald Leung at Lee Cheong Gold Dealers in Hong Kong.
“But speculators are still bullish on gold, as uncertainties about the ‘fiscal cliff’ hang around and they believe that central banks around the world will stay loose on monetary policy.”
On a technical analysis, the gold price “is just a few dollars shy of its 50-day moving average sitting at $1741,” says a note from Swiss investment and bullion bank, UBS.
“More importantly, a key technical level [is] lurking at $1739.10…A break above this level, which is the month’s high, would be a crucial bullish development.
Again citing the US holiday, “Market participants may have to wait until after the weekend to see some action,” UBS adds. “[European] investors still have the day ahead to position for what may be an exciting week.”
Next week the US Treasury will seek to raise $99 billion in new debt, according to Bloomberg data.
Treasury bond prices rose Friday, pushing interest rates down to just 1.67% on 10-year debt.
“Pimco is avoiding, or trying to keep a low weighting, on maturities beyond 10 years,” said Tony Crescenzi, a portfolio manager at the giant bond-fund group, in an interview. “Because we know the Fed’s intent is to reflate a deflated economy.”
Nearer-term, he believes, “Treasuries provide good insurance against macro risk.”
British Gilts and German Bunds also rose Friday morning, reducing 10-year German yields to just 1.42% – despite stronger-than-expected Ifo business confidence data – after the S&P ratings agency cut the status of 3 more Spanish banks.
Spain’s sovereign debt prices fell, nudging 10-year interest rates up to 5.68%.
Spain’s wealthiest region, Catalonia, goes to the polls on Sunday for elections which local president Artur Mas has called a referendum on independence from Madrid.
Over in Athens meantime, negotiations continued over €31.2 billion in bail-out funds which Greece has been waiting for since June from the International Monetary Fund.
The IMF said this morning that Greek debt would be “viable” if cut to 124% of GDP by 2020. It is currently on track to hit 190% by 2014.
“It’s natural [we] look out for other types of assets,” today’s Financial Times quotes a Brazilian economist after new data showed the central bank adding more than 17 tonnes of gold bullion to its national reserves in October.
That took Brazil’s total reserves to 53 tonnes, an 11-year high.
The latest gold reserves data from the IMF also show Turkey, Kazakhstan and Russia again raising their national holdings as well.
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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and – starting this Sunday – just 0.5% dealing fees.
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