GOLD BULLION dropped and then swiftly recovered a $15 drop in Asian trade Thursday in one what long-time broker said was clearly "manipulation", but continued to trade below $1200 lunchtime in London as news broke that a leading bullion bank is quitting physical deals.
After exiting the daily London gold and silver Fix benchmarks in early 2014, Deutsche Bank – the largest investment bank in Europe, and a market maker in wholesale bullion – "is exiting physical trading of precious metals," reports Bloomberg, citing a London spokesman but reporting from Frankfurt and Milan.
Now apparently planning to wind down its physical gold bullion, silver, platinum and palladium business, Deutsche Bank reportedly sold its base metal and energy business to US investment bank Citigroup this September.
Full London bullion market maker J.P.Morgan is also finding "new opportunities" in commodities as a result of banking peers quitting natural resources, Metal Bulletin today quotes Michael Camacho, co-head of commodities at the US investment bank.
"From our perspective...we don't think that because some banks pulled out, the commodities market is less competitive.
"If anything, the market continues to be just as competitive, just with different players in the mix."
With spot gold bullion trading very quiet Thursday as the US stayed closed for Thanksgiving, "Don't expect any fireworks," writes David Govett at brokers Marex Spectron, "apart from the overnight cowboys!"
Calling the 1.1% drop and immediate bounce back to $1199 "stupid", Govett says "Someone or some people have obviously decided to try and take advantage of a quiet market with fewer participants than normal.
"Perhaps it is seriously time for the regulators to look at these moves in the futures...If this isn't manipulation, then I really don’t know what is."
Deutsche Bank announced in January it was quitting the London gold and silver Fixes less than 18 hours after Germany's financial regulator BaFin said it was concerned about "manipulation" of precious metals prices, as well as foreign currency rates.
In June, Gold Fixing member and London market-maker Barclays was found guilty and fined for failing to prevent market abuse by a bullion trader back in 2012.
Swiss regulator Finma is now investigating 11 currency and bullion traders at major investment bank and London precious metals market maker UBS, press reports claim today.
A private lawsuit filed in Manhattan by jewelry business Modern Settings LLC accuses gold-bullion market makers Goldman Sachs, HSBC, as well as chemicals giant BASF and South African bullion bank Standard Bank, of conspiring to rig prices against traders in the US futures market.
Ahmedabad, 26 November 14: Indian Institute of Management, Ahmedabad (IIMA) and the World Gold Council (WGC), today, announced the setting up of the ‘India Gold Policy Centre’. A first-of-its-kind initiative, the centre is aimed towards conducting cutting-edge research on all aspects of the Indian gold industry.
GOLD PRICES held below $1200 per ounce in Asian and London dealing on Wednesday, trading $1.50 beneath last Friday's finish as world stock markets were also flat in quiet trade ahead of the long US Thanksgiving weekend.
New US data today showed personal spending rising less quickly than analysts forecast in October, while inflation in consumption prices – a key measure for Federal Reserve policymakers – ticked up to 1.6% per year.
"We expect investment demand for gold to wane," says a new outlook from French bank and London bullion market maker Societe Generale today, "exacerbated when the US begins to raise interest rates next year due to better economic conditions.
Forecasting an average 2015 gold price of $1025 per ounce, SocGen's metals analysts believe gold will fall "as the Dollar strengthens further...and the market believes there are better alternatives" to bullion.
Further out, SocGen now foresees gold prices averaging $862 between 2016 and 2019.
More urgently, "The Swiss Gold initiative still seems to be mostly on the back-foot," says a note from refinery group MKS-Pamp, "with the majority of investors dismissing this as a foregone
'no' vote" on Sunday.
"If a 'yes' goes through," says MKS – meaning the Swiss National Bank must raise its gold holdings to 20% of reserves, all held domestically – "the repercussions for gold and the Franc will be dramatic."
The initiative would likely hamper the SNB's policy of pegging its Franc to the ailing Euro at €1.20, launched in 2011 and achieved by creating and spending money on Eurozone bonds in a huge QE program.
With consumer sentiment in France and Italy today coming in below analyst forecasts, the European Central Bank may have to widen the size and scope of its planned QE program – expected to detailed at next week's policy meeting – according to a speech in London by vice-president Vitor Constancio.
Unless buying covered bonds from Eurozone banks takes the ECB's balancesheet back to its early 2012 size of some €3 trillion, "We will have to consider buying other assets," Constancio said, "including sovereign bonds in the secondary market, the bulkier and more liquid market of securities available."
Berlin today sold new 10-year German government debt to investors at a fresh record-low yield of just 0.74% per year.
"The market is very bearish on the Euro and [Japanese] Yen," Bloomberg quotes analyst Tai Wong at Canada's BMO today, forecasting further gains in gold prices denominated in those currencies.
With gold withdrawals from the Shanghai Gold Exchange having reached 1,761 tonnes by November 14, and weekly withdrawals since the Golden Week holiday at the beginning of October averaging comfortably over 50 tonnes, China looks to be heading for an annual demand total (SGE gold withdrawals equate to overall demand) of comfortably over 2,000 tonnes again this year assuming these levels are maintained.
Historically November and December are strong months for Chinese gold demand ahead of the Chinese New Year (February 19 2015), which suggests gold demand will remain strong through January and the first half of February too.
Indeed should the current weekly demand levels hold up – the past six weeks have seen withdrawals from the SGE of 52 tonnes, 54 tonnes, 47 tonnes, 60 tonnes, 52 tonnes and 68 tonnes respectively – then we could be heading for an annual figure of around 2,100 tonnes. This is not far short of last year’s record of 2,199 tonnes as stated by the China Gold Association in its China Gold Yearbook released in September (of which 1,507 tonnes came from imports of gold bullion, 17 tonnes in dore imports from overseas mines, 428 tonnes of domestically mined gold thus leaving 247 tonnes to have come from recycled gold scrap. Figures are all from Koos Jansen, Nick Laird and the China Gold Association).
China 2014 gold demand heading for 2,100 tonnes was first posted on November 25, 2014 at 4:59 pm.
GOLD PRICES fell and then swiftly regained $10 per ounce Tuesday lunchtime in London after better-than-forecast US GDP, trading back at $1200 data as central-bank gold buying policies again came under the spotlight.
The world's largest economy grew 3.9% per year in the third quarter, while domestic US prices rose 1.4% – down sharply from Q2's inflation rate of 2.1%.
World stock markets cut their earlier gains as the Dollar first jumped and then fell hard vs. the Euro.
Ahead of next weekend's Swiss gold referendum – wanting all SNB gold held domestically, with a ban on ever selling again and new buying raising the metal to 20% of central-bank assets – French far-right party Front National has called for the same proposals to be applied at the Banque de France.
Ukraine's central bank yesterday said last month's 35% drop in Kiev's reported gold holdings merely "optimized the composition of international reserves," raising the US Dollar and Euro shares to 70.3% and 15% respectively.
Though much smaller, Ukraine had previously been buying gold alongside neighboring Russia for the last two years, adding some 15 tonnes as Moscow acquired 10 times as much to become the world's 5th largest national holder by the time this year's conflict over Crimea and now the Donbass regions broke out.
Analysts at Deutsche Bank meantime, prompted by European Central Bank member Yves Mersch's comments on possibly buying gold as part of the ECB's new QE asset purchase scheme, say that "The idea has merit because of the possible sellers.
"A program that targeted [private investment gold] holdings...especially in countries like Germany...would liberate dormant liquidity, some of which might even flow into consumption."
"The [proposed Swiss] policy is barmy," agrees Financial Times columnist James Mackintosh, "but the idea of buying gold might usefully be deployed by the European Central Bank as the most politically acceptable, if least effective, form of large-scale quantitative easing" because it would appeal to "German conservatives".
President of Germany's Bundesbank, and staunchly anti-QE to date, Jens Weidmann yesterday told a convention in Madrid that "While monetary policy can influence short-term demand, it cannot permanently boost growth prospects.
"The same is true, unfortunately, for fiscal policy – even if additional fiscal space [ie, borrowing capacity] were available."
Bond yields on the debt of several Eurozone members states today fell to new all-time lows on what analysts called "speculation" that the ECB will begin QE at next week's meeting.
Reviewing central-bank bullion policies, "Gold's reputation as an inflation hedge, insurance against financial disaster and as a good diversifier...[meant that during the 2008-2012 crisis] the official sector rapidly switched from being a net seller of gold to a net buyer," says a special report from David Jollie at Japanese trading house and London market maker Mitsui Precious Metals.
"We still expect central bank buying to be a net contributor to demand for gold in 2015," Jollie adds, but "we suspect that falling oil prices will lower gross purchases next year."
Crude oil rose Tuesday, recovering 5% from this month's new 4-year lows as members of the Opec producer nations' cartel met in Vienna to discuss cutting output quotas in a bid to stem further losses.
Recent polls suggest the November 20th referendum does not have sufficient popular support â€“ and, therefore, the markets are not expecting any change in the Swiss central bankâ€™s gold policies or lasting impact on the metalâ€™s price.