Monex Precious Metals Review: Gold rises to $1217, Silver 16.92

in 20-12-2014

Monex spot gold prices opened the week at $1,210 . . . traded as high as $1,217 on Monday and as low as $1,190 on Tuesday . . . and the Monex AM settlement price on Friday was $1,196, down $14 for the week

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Gold 2015: A Quick Heads-Up

in 19-12-2014

Gold in 2015 will find mine output slowing, the Dollar rally questioned, and China's demand ever-more important...   AFTER 2013 belonged to equity investments worldwide, and gold prices sank with silver, 2014 saw a split between the US and the rest of the world, writes Adrian Ash at BullionVault.   Pretty much anything stamped "Made in America" gained sharply this year, as our Annual Asset Performance Table shows.     Yet gold has held steady vs. the Almighty Dollar, gaining in Euros and Sterling terms, and flying vs. the Japanese Yen and Russian Ruble. Silver on the other hand has fallen badly again, dragged down by being an industrial metal caught in the same commodity slump as crude oil and copper.    So what might 2015 bring?    US monetary policy will be crucial again. But not quite as most analysts are now forecasting.   The fact of QE ending this year in the US was already priced in by 2013's near-record crash. As we said at the start of 2014, a lot of good news was also priced into other asset classes, especially the stock market.   2015 is now expected to bring the first rise to US interest rates. Yet the Fed's new buzzword...that it will be "patient"...says any rise will likely be small, a mere token. Delaying and disappointing the Dollar's bull run could see a marked rebound in Dollar gold and silver prices.    And in truth, I think, QE has not really ended. It is only taking a pause.    Looking to the floor for precious metals, world gold mining output is likely to have peaked this year. Cost-cutting is starting to delay or close new projects, and lower investment means lower output further ahead. This might not matter immediately, but mining costs suggest a psychological floor for 'hot money' traders to work with around this $1200 level.   Silver could aso see mine output slip from near-record levels in 2015, because it's mostly a byproduct of mines wanting to get other metals, and the commodity slump is denting new spending there as well. Current prices are well above whatever cost an analyst might put on digging up silver. Still, it is perhaps signal that this month's sharp crash to near 5-year lows came right around estimates for primary silver mining costs at $14 per ounce.   On the demand side, the growing threat of a slow, global deflation could hurt both gold and silver buying. But savers wanting to preserve their wealth will always find gold has appeal, especially if deflation risks credit defaults and bank failures.   Silver in contrast may find technology and other end-user demand suffers. 2014's new 5-year highs in the Gold/Silver Ratio suggest "store of value" is winning over industrial growth.   Most urgently though, we still don't know how China's huge private gold buying will respond to a slowdown in the world's second-biggest economy (and its No.1 consumer of pretty much everything), let alone a "hard landing" or credit bubble collapse.   2015 looks increasingly like the year we might get to find out at last.

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Gold Trading "Thin" Below "Increasingly Important" $1200 Level as London Starts Christmas Holidays, Russia Grows Gold Reserves

in 19-12-2014

GOLD TRADING was quiet Friday in London, with prices moving sideways below $1200 per ounce as Asian equities closed higher but European stock markets held flat.   Crude oil rallied from this week's new 5-year highs, and weaker Eurozone government bonds also rose – pushing Spanish yields to new record lows – on what Bloomberg calls "speculation" the European Central Bank will start a QE program to buy debt in New Year 2015.   "Thin market conditions will likely persist towards the year-end holiday season," says one gold-trading desk in a note.   "Technically," says another, "gold is forming a wedge and looks likely to break one way or the other in the coming days."   "Gold prices are currently capped," says bullion market maker HSBC's analyst James Steel, "by a stronger Dollar and ongoing weak oil prices.   "Equity market gains further reduce the appeal of alternative assets like gold. Despite this, gold keeps challenging the $1200 level."   Fellow bullion bank ScotiaMocatta's technical analysts call $1200 per ounce "an increasingly important level of closing resistance," pointing to the "continued attempt and failure to break above this level on a closing basis."   Major currency pairs were also trading flat on Friday, but the Russian Ruble continued to rally from new all-time lows, erasing the last of this week's earlier 20% crash at fewer than 60 per Dollar.   "It appears possible that the Central Bank of Russia has started to sell off some of its gold reserves in December," claimed a new report from French investment bank and bullion market-maker Societe Generale late Thursday, saying "some sources reporting that official gold reserves dropped by $4.3 billion in the first week of the month."   That report, however – made by Business Insider mistranslating a Russian source last Friday – confused "FX and gold reserves" for just "gold reserves", and has since been corrected.   Data from the Central Bank of Russia today said its bullion holdings rose 1.6% in November to 1,188 tonnes, extending Moscow's near-record gold buying in 2014 to 152.5 tonnes.   Gold imports to India, the world's No.1 private consumer market, totalled that much in November alone.   "Our best guess [for 2015] is that gold continues falling," says a new note from UK stockbroker Brewin Dolphin's mining analyst Nik Stanojevic.   "Extrapolating trends since the second half of 2013, we get to a 2015 year end estimate of $1080," he says, citing "our house view of low inflation expectations and very modest increases in nominal interest rates."   Gold trading in Shanghai meantime fell back today, with volume in the main contract for wholesale metal in China – the world's top private buyer ahead of India in 2013 – dropping below this month's average level so far in Yuan terms, little more than half the near-record turnover of Friday last week.

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'One-Way Traffic' to Buy Gold Post-Fed in Asia Fades as Swiss Rates Go Negative, Indian Gold Premiums Too

in 18-12-2014

BUY GOLD bids faded in late London trade Thursday, taking spot prices down through $1200 and back to $1194 per ounce – the level seen before the US Fed changed key wording in Wednesday's statement on when Dollar interest rates might rise.   Instead of waiting a "considerable time", the Fed will now be "patient" before hiking rates from the 0% imposed since the start of 2009.   Today the Swiss National Bank cut the interest rate it pays on commercial bank deposits at the central bank to a target of minus 0.25% per year, blaming capital flight from Russia amid the collapse of the Ruble.   World stock market extended Wednesday's strong rise on Wall Street except in China, where equities held flat for the day after new data said house prices fell again nationwide in November.   "The Fed did a good job of distancing themselves from the 'considerable' guidance," says a note from Dutch bank ING, "without upsetting equity markets."   "The precious metals staged a recovery in Asia today," say traders at Swiss refining and finance group MKS.   "It was one-way traffic" with Chinese traders in particular buying gold up $1200 per ounce after an initial drop after the Fed statement to $1188.   New Swiss export data today showed Indian wholesalers buying 77 tonnes of gold last month, some 3% more than October according to investment bank UBS on "strong demand during Diwali season and some pre-emptive purchases on expectations that import rules might be tightened."   But instead, India suddenly eased its anti-import rules at the end of November, "So dealers imported more than their requirement," says MNC Bullion director Daman Prakash Rathod in Chennai.   "They are now struggling to find buyers" in the absence of wedding or festival days on the Hindu calendar, Rathod says, with local prices dropping to $2 per ounce below London quotes as retail quotes to buy gold fall, taking the premium negative for the first time in 5 months.   Silver prices also eased back from an Asian rally in London trade Thursday, retreating below $16 per ounce for the third time since hitting this 5-year low at the start of November.   The Russian Ruble meantime gave back all of its overnight rally after President Putin's annual press conference in Moscow, but held 27% above Tuesday's sudden new all-time low near 80 per Dollar.   The Central Bank of Russia has been the world's heaviest sovereign buyer of gold in 2014, taking its reserves into the top 5 at more than 1,170 tonnes.

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Gold supplies extends decline in 2014, may be supportive of prices

in 18-12-2014

When gold prices rose to $2000 per ounce levels, there was considerable selling of old gold for recycling but now they have very little left to sell and becasue prices are no longer as attractive, he said.

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Gold Prices Flat Below $1200 Ahead of US Fed Decision on Zero Rate Promise, "Expect Volatility" as Russia Buoys Ruble with FX Intervention

in 17-12-2014

GOLD PRICES traded flat in London on Wednesday, briefly spiking above $1200 per ounce as crude oil prices steadied, and the Russian Ruble rallied from yesterday's 20% plunge, ahead of the US Fed's latest policy statement.   With Russian media heavily trailing tomorrow's scheduled press conference from President Putin, Moscow joined the Opec oil cartel nations in saying it won't cut production in 2015, despite crude's plunge to 5-year lows.   The Ruble recovered to 64 per Dollar from new record lows overnight at 71 after the Central Bank of Russia announced new sales of Euros and Dollars from its foreign reserves to support its currency, but the government refrained from imposing exchange controls to stem capital flight.   US Treasury bonds meantime edged down as traders looked to today's new policy statement from the Federal Reserve, widely expected to cut the key "considerable time" promise on keeping rates at zero.   "Expect a volatile session ahead," said one gold trading desk, "particularly if we see the Fed change some of their language in the accompanying policy statement."   Low interest rates, says London-HQ'ed consultancy Thomson Reuters GFMS, are helping deter gold miner hedging, because the gold market currently lacks any "premium" on forward sales over and above current spot prices.   "A break below $1192/86," said technical analysis from French bank Societe Generale, "would accelerate the down move as this would confirm a Head and Shoulders pattern."   "We suspect," says Karen Jones in her weekly technicals for Germany's Commerzbank, "that the market is attempting to base down at the $1146/1132 recent lows.   "However, gold has not quite done enough to confirm."   Forecasting a gentle rally to $1280 by end-2015, Australian bank ANZ says "physical gold demand in China and India were held back in 2014 amid high stocks and import controls respectively.   "Both these shackles have been removed, putting demand on a solid footing as we head into 2015."   New research from Australian bank Macquarie meantime shows gold has the weakest correlation with crude oil of all the major tradable metals, and has been less correlated since 2010 than the US stock market on a weekly basis.   The ratio of gold to oil prices, adds London consultancy Metals Focus, is now at the highest level since the late 1990s at 20 barrels per one ounce.

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