{"id":38506,"date":"2013-05-23T08:53:09","date_gmt":"2013-05-23T12:53:09","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=38506"},"modified":"2013-05-23T08:53:09","modified_gmt":"2013-05-23T12:53:09","slug":"bullion-rallies-despite-losing-us-fed-prop-as-stock-markets-sink-on-weak-china-data","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/05\/23\/bullion-rallies-despite-losing-us-fed-prop-as-stock-markets-sink-on-weak-china-data\/","title":{"rendered":"Bullion Rallies Despite “Losing US Fed Prop” as Stock Markets Sink on Weak China Data"},"content":{"rendered":"

London Gold Market Report<\/strong>
\n from Adrian Ash<\/strong>
\n BullionVault<\/strong><\/span><\/a>
\n Weds 22 May, 08:45 EST<\/strong><\/p>\n

BOTH gold and silver rose in Asian and London trade Thursday morning, defying a sharp slide in global stock markets to gain 3.0% rally from yesterday’s sharp sell-off.<\/p>\n

Commodity prices fell as major government bonds rose but weaker Eurozone debt slipped, pushing interest rates higher.<\/p>\n

Tokyo’s Nikkei index \u2013 up by 85% from November \u2013 dumped more than 7% after new data showed a surprise contraction in China’s manufacturing sector.<\/p>\n

Private “retail” investors have “abducted” the Japanese stock market, accounting for more than a third of recent volume, according to brokers quoted by the Financial Times.<\/p>\n

“[Gold’s] inability to hold the highs is bearish,” says the latest technical chart analysis from Scotia Mocatta.<\/p>\n

“[Wednesday’s] intra-day rally is indicative of bargain hunting in gold rather than a change in trend,” the bullion bank adds, pegging support at the April 2013 low of $1323.<\/p>\n

Like Barclays Capital’s analysts, Scotia now puts short-term resistance at yesterday’s sudden spike of $1412.<\/p>\n

Gold prices rose Thursday morning to breach $1390 per ounce once again, recovering two-thirds of Wednesday’s plunge from that 1-week high \u2013 made as US Federal Reserve chairman Ben Bernanke was testifying to the Senate on the likely direction of Dollar interest rates and quantitative easing<\/a>.<\/p>\n

Having warned against “a premature tightening of monetary policy” however, Bernanke was then asked if the Fed might start reducing its $85 billion in monthly QE purchases of government debt and mortgage bonds before Labor Day on Sept. 1st.<\/p>\n

“I don’t know,” Bernanke replied.<\/p>\n

Minutes from the US central bank’s latest policy meeting also showed one participant wanting to reduce the level of QE “immediately”.<\/p>\n

“Not having the future support of the Fed,” says Edward Meir’s note for INTL FC Stone, “will remove a major prop for gold.”<\/p>\n

“It seems the market is now squarely focusing on the September 17-18 [policy] meeting for the Fed to make its move,” reckons ING bank’s analysts.<\/p>\n

“Together with expectations of tightening quantitative easing,” says Mitsubishi analyst Jonathan Butler \u2013 also quoted by Reuters \u2013 “the general trend for a modest economic recovery in the developed markets is going to fuel growth in the equity markets and the Dollar.<\/p>\n

“That should see gold coming under pressure.”<\/p>\n

“The momentum is strongly negative,” says Edward Lashinski, global strategist at RBC Capital Markets in Chicago.<\/p>\n

“The market understands that gold is no longer a safe haven.”<\/p>\n

On the supply side meantime, “Being more profitable is better than being bigger,” said Jamie Sokalsky, CEO of the world’s largest gold miner, Barrick, at Bloomberg’s Canada Economic Summit in Toronto on Tuesday.<\/p>\n

Also forecasting new record highs for the gold price<\/a> thanks to central-bank demand and the state of the global economy, Sokalsky mooted “divesting” some smaller, higher-cost mines to focus on more efficient projects.<\/p>\n

In particular, the giant Pascua-Lama project in Chile \u2013 valued at some $8.5 billion, and already eating some $5bn in costs \u2013 has been delayed by environmental concerns<\/a>, says Canada’s Financial Post.<\/p>\n

“Barrick is considering all its options at Pascua-Lama,” says the paper, “including outright suspension.”<\/p>\n

At current gold prices around 10% of gold mines globally will be making losses, according to Thomson Reuters GFMS data.<\/p>\n

“We would initially expect the oldest mines closing,” says a special report from Japanese trading house Mitsui’s metals strategist David Jollie in London, “as they are in many cases coming to the end of their operating life.”<\/p>\n

Gold mining companies are likely to avoid closing newer projects “as long as possible,” Jollie says. But if the gold price stays low enough long enough, “closures will happen.”<\/p>\n

 <\/p>\n

Adrian Ash<\/strong><\/span><\/a><\/p>\n

BullionVault<\/strong><\/span><\/a><\/p>\n

Gold price chart, no delay | Buy gold online<\/strong><\/span><\/a><\/p>\n

 <\/p>\n

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, Switzerland for just 0.5% commission.<\/p>\n

 <\/p>\n

(c) BullionVault 2013<\/p>\n

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events \u2013 and must be verified elsewhere \u2013 should you choose to act on it.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

London Gold Market Report from Adrian Ash BullionVault Weds 22 May, 08:45 EST BOTH gold and silver rose in Asian and London trade Thursday morning, defying a sharp slide in global stock markets to gain 3.0% rally from yesterday’s sharp sell-off. Commodity prices fell as major government bonds rose but weaker Eurozone debt slipped, pushing … <\/p>\n

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