Daily Market Update

Gold Prices Rise To $1,326/oz as China U.S. Treasury Buying Report Creates Volatility

– Gold prices rise to $1,326/oz on concerns China may slow U.S. Treasury buying
– Equities fell sharply on the report as did Treasurys and the U.S. dollar
– Chinese officials think U.S. debt is becoming less attractive compared to other assets
– Trade tensions could provide a reason to slow down or halt U.S. debt purchases
– U.S. dollar vulnerable as China remains biggest buyer of U.S. sovereign debt
– Currency wars to return as China rejects U.S. hegemony in Asia


Gold prices in US dollar (GoldCore)

Gold prices rose yesterday, reaching their highest level in four months as the dollar fell just after a report that Chinese officials had encouraged slowing or halting purchases of U.S. Treasury securities.

The greenback fell against all major currencies and especially gold after the report.

Spot gold prices rose 1.2% from session lows of $1,310/oz to session highs of $1,326.56/oz prior to falling back and closing in New York at $1,317.40/oz where it remains in late morning trading in London.

U.S. Treasury yields jumped to 10-month highs following a Bloomberg  report that Chinese officials have recommended China gradually sell or halt their buying of U.S. debt.

China is likely to stop buying U.S. Treasurys, the question is when, and when it happens it will have major repercussions for U.S. monetary policy. It will greatly hamper the Federal Reserve in reducing its bloated balance sheet and may force the Fed to begin QE again which would be very positive for gold.

Chinese relations with the U.S. remain frayed and Trump’s aggressive economic and military policies are likely to see a monetary response from China.  As China-U.S. relations deteriorate, so too will currency wars return as China rejects U.S. hegemony in Asia.

The dollar and financial and monetary dominance of the U.S. is increasingly at risk. And as monetary and economic tensions between the struggling superpower and the emerging superpower deepen –  a gold-backed yuan becomes more likely.

If China were to partially back its yuan with gold it would require a gold price of $64,000 per ounce, 50 times gold bullion’s price today, according to research from respected Bloomberg Intelligence (see below).

Recommended Reading

China Sets Up Gold Investment Fund For Central Banks

China Catalyst To Send Gold Over $10,000 Per Ounce?

Gold At $64000 – Bloomberg’s ‘China Gold Price’

News and Commentary

Gold inches up on weaker dollar, equities (Reuters.com)

Gold May Have More Room to Run in 2018 – Bank of China (Bloomberg.com)

Dollar dented by report China may halt bond buys (Reuters.com)

Buffett on cryptocurrencies: ‘I can say almost with certainty that they will come to a bad ending’ (CNBC.com)

Cryptocurrencies may succeed as money in some backward places – Goldman (Bloomberg.com)


Source: U.S Treasury Department

Asian central banks push back, sending dollar bears a warning (Bloomberg.com)

This is how China’s global ambitions are just getting started (StansBerryChurcHouse.com)

Pimco, Citigroup Sound Complacency Alarm for Global Economy (BloombergQuint.com)

Palladium May Continue To Outperform Platinum (Bloomberg.com)

‘Recovery!?’… But At What Cost? (ZeroHedge.com)

Gold Prices (LBMA AM)

11 Jan: USD 1,319.85, GBP 978.14 & EUR 1,104.45 per ounce
10 Jan: USD 1,321.65, GBP 976.96 & EUR 1,103.31 per ounce
08 Jan: USD 1,314.95, GBP 972.01 & EUR 1,102.19 per ounce
08 Jan: USD 1,318.80, GBP 974.33 & EUR 1,099.09 per ounce
05 Jan: USD 1,317.90, GBP 973.40 & EUR 1,094.25 per ounce
04 Jan: USD 1,313.70, GBP 969.77 & EUR 1,090.24 per ounce
03 Jan: USD 1,314.60, GBP 968.20 & EUR 1,092.96 per ounce

Silver Prices (LBMA)

11 Jan: USD 17.01, GBP 12.64 & EUR 14.24 per ounce
10 Jan: USD 17.13, GBP 12.64 & EUR 14.27 per ounce
09 Jan: USD 17.05, GBP 12.60 & EUR 14.30 per ounce
08 Jan: USD 17.17, GBP 12.68 & EUR 14.33 per ounce
05 Jan: USD 17.15, GBP 12.66 & EUR 14.24 per ounce
04 Jan: USD 17.13, GBP 12.64 & EUR 14.20 per ounce
03 Jan: USD 17.12, GBP 12.63 & EUR 14.25 per ounce

Recent Market Updates

– Gold Hits All-Time Highs Priced In Emerging Market Currencies
– World is $233 Trillion In Debt: UK Personal Debt At New Record
– 10 Reasons Why You Should Add To Your Gold Holdings
– Spectre, Meltdown Highlight Online Banking and Digital Gold Risks
– Palladium Prices Surge To New Record High Over $1,100 On Supply Crunch Concerns
– Gold Has Best Year Since 2010 With Near 14% Gain In 2017
– Happy 2nd Birthday Bail-in Tool! We Suggest Gold As The Perfect Gift
– 98,750,067,000,000 Reasons to Buy Gold in 2018
– Gold, Bitcoin and the Blockchain Replaces the Banks – Realists Guide To The Future
– It’s A Wonderful Life Is A Wonderful Lesson To Hold Gold Outside of The Banking System
– Goldnomics Podcast – Gold, Stocks, Bitcoin in 2018. Everything Bubble Bursts?
– What Peak Gold, Interest Rates And Current Geopolitical Tensions Mean For Gold in 2018
– New Rules For Cross-Border Cash and Gold Bullion Movements

Mark O'Byrne
Executive Director

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