Gold Sentiment Increasingly Positive – Market Looks for Signal This Week

Today’s AM fix was USD 1,616.50, EUR 1,317.87, and GBP 1,029.75 per ounce.
Friday’s AM fix was USD 1,618.75, EUR 1,321.43 and GBP 1,031.51 per ounce.

Silver is trading at $27.66/oz, €22.65/oz and £17.68/oz. Platinum is trading at $1,409.50/oz, palladium at $571.15/oz and rhodium at $1,125/oz.

Gold climbed $7.80 or 0.48% in New York on Friday and closed at $1,623.40/oz. Silver rose to a high of $27.839, edged off a few times, and ended with a gain of 0.98%.

US GDP results were 1.5%, which beat the expected 1.2% for the second quarter.  This hurt short term outlook that the US Fed would embark on more QE after their meeting this week. However, it still highlights that US GDP slowed sharply from Q1 (2%) and Q4 in 2011 (4.1%). Gold hit a high of $1,628.60/oz ahead of the report.

This week’s US data: Tuesday – Personal Income and Spending, Core PCE prices, the Employment Cost Index, the Case-Shiller 20-city Index, Chicago PMI, & Consumer Confidence.  Wednesday – ADP Employment, the ISM Index, Construction Spending and FOMC Rate Decision.  Thursday – Initial Jobless Claims and Factory Orders.  Friday – July’s jobs data and ISM Services.


Cross Currency Table – (Bloomberg)

The euro is under pressure today ahead of the Eurozone business sentiment data (results -0900 GMT) which is expected to show further weakness in July.  Ahead of the Fed meeting, investors will keenly watch the meeting between Mario Draghi, the ECB President and Timothy Geithner, the US Treasury Secretary, scheduled today in Frankfurt.  Geithner will first meet with German Finance minister Wolfgang Schaeuble on the North Sea island of Sylt, where Schaeuble is on holiday.

Gold held steady above $1,620/oz on Monday, as investors wait for the central banks from Europe and the US to give definite signs on their plans for more QE.

QE3 would be bullish for gold and increase the inflation outlook which would benefit gold as a hedge against the rising prices.

The public is now interested in the yellow metal again, with investors adding to their physical positions. Market watchers will take their clues from the data out this week.

More investors are trading euro gold than ever before and  using euro gold as the barometer of internal health of the gold market right now, says analyst Edel Tully of UBS.  Euro gold is up 9% this year versus US dollar gold’s +3% performance. 

The markets await the Fed’s move.  Certainly some form of QE3 is inevitable whether it is announced this week or at the next FOMC meeting scheduled in early September.


Gold Prices/Rates/Fixes /Volumes – (Bloomberg)

The US gold futures contract for August delivery inched up 0.2% to $1,620.70/oz.

Spot gold prices have moved between $1,530/oz – $1,640/oz over the past two months.

The European Central Bank has its policy meeting on Thursday and after Mario Draghi’s pledge to do everything to protect the Eurozone it has fuelled expectations of more policy action.

Gold ETF shares have been contracting.  SPDR shares have been decreasing for a month and fell to 1,248.606 tonnes on Friday, its lowest level since the beginning of November. 

In Asia, Vietnam looks set to tighten their gold legislation.  Vietnamese and foreigners may soon be banned from taking gold bullion out of the country, and possibly even raw gold like nuggets and gold dust.  Jewellery weighing more than 300g would have to be declared with customs and taxed.

Permits to remove gold would require 15 days for processing.

Vu Ngoc Lan, deputy director of the SBV’s Legislation Department, said the circular (only a draft) will strengthen the management of gold bullion and raw gold to keep the market stable.    

For breaking news and commentary on financial markets and gold, follow us on Twitter.

NEWS
Gold hovers around $1,620 per ounce, central bank meetings eyed  – Reuters

 Gold futures gain as stimulus hopes stir – MarketWatch

Precious metals close higher on Comex – Sky News

 At least three banks seen central to Libor rigging – Reuters

COMMENTARY
An Absolutely Stunning Development In The Silver Market – King World News

Schäuble view on eurozone at odds with US – The Financial Times

Weak Economy Heads Lower – Wall Street Journal

Fed may announce QE3, but not in August – FX Street

Stephen Flood

Stephen Flood is the CEO of GoldCore. He is a former Wall Street equity trader and FinTech expert. He has been involved in the precious metals markets since 2004 and has appeared as an expert contributor on CNBC, CNN, BBC, RTE & Bloomberg TV and has had articles published in the Irish Times, Irish Independent and The Sunday Business Post.

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