London Gold Market Report
from Adrian Ash
BullionVault
Weds 4 Sept 09:15 EST
WHOLESALE GOLD fell back below $1400 per ounce for the third day running Wednesday lunchtime in London, dropping to $1393 and trading 1.7% below yesterday’s high as crude oil and world stock markets both fell 0.5%.
Silver dropped to $23.53 per ounce, some 4.0% below Tuesday’s top.
Major government bonds edged higher, nudging interest rates down, while weaker Eurozone debt fell in price.
Now putting airstrikes against Syria to a Congressional vote next week, “Failing to respond would only increase the risk of [further chemical weapons] attacks,” said US president – and 2009 Nobel peace prize winner – Barack Obama at a press conference in Sweden today.
“The potential for Mideast tensions to intensify would be bullish for bullion,” reckons a note from London market maker HSBC.
“Safe haven demand for gold is currently strong…[But] in order for gold to build on recent gains over $1400/oz, oil prices also have to remain strong we believe.”
Crude oil slipped 0.5% on Wednesday morning, with US futures retreating to $108 per barrel.
Speaking ahead of tomorrow’s G20 summit in St Petersburg, which Obama will attend, Russian president Vladimir Putin warned the US that the Kremlin may revive exports of missiles to its Middle Eastern allies, which include Syria and Iran.
But whilst saying it was “ludicrous” to think the Assad regime had used chemical weapons against civilians as alleged, Putin said Russia would “act in the most decisive and serious way” if UN inspectors prove those claims.
For gold, say commodity researchers at Commerzbank, “We believe that the effect of these political factors will be short-lived.
“Current geopolitical risks are unlikely to bring about any sustained trend reversal for gold. After all, physical demand is relatively weak at present.”
“I reiterate what I said last week,” says David Govett at brokers Marex, “about buying the rumour of war/missile strikes and selling the fact.
“Bear that in mind as time ticks down to the Congressional vote.”
The 17-nation Eurozone meantime followed the UK and US today in revising its latest GDP figures higher, cutting this spring’s year-on-year drop to 0.5% from the 0.7% first reported.
New service-sector data meantime showed a four-month high in China, and a surge to the fastest UK growth since 2007.
The Pound hit 1-week highs above $1.56, curbing gold for Sterling investors back below £900 per ounce – a two-year low when first breached in gold’s April 2013 crash.
Gold mining output from world No.5 producer South Africa was hit meanwhile by a two-day strike, with work at 17 “partially or severely affected” according to the Chamber of Mines.
“If you are prepared to move, then we may be prepared to move,” said NUM spokesperson Lesiba Seshoka on SAFM radio today, suggesting a step back from the 60% wage hikes demanded so far but refusing to comment on rumors of a drop to 10% claims.
Over on the demand side, the Reserve Bank of India today reinstated gold imports, but with a stricter list of approved firms and with the ban on gold coins and medallions still in place.
Gold smuggling to India has doubled so far in 2013 according to industry estimates, thanks to the government’s 10% duty and other anti-gold-imports measures.
Nepalese seizures of illegal shipments to India are already three times last year’s total. India’s banks are now asking potential borrowers not to use any loans to buy gold, the Deccan Chronicle reported this week.
Shops in mid-tier city Xiamen in China – now the world’s No.2 consumer country, and likely to overtake India in 2013 on official data – have seen gold and silver jewelry demand rise 42% so far in 2013 from the first 7 months of 2012, equaling more than $148 million.
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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 and silver in Zurich or Singapore for just 0.5% commission.
(c) BullionVault 2013
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