{"id":40414,"date":"2013-07-30T09:46:22","date_gmt":"2013-07-30T13:46:22","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=40414"},"modified":"2013-07-30T09:46:22","modified_gmt":"2013-07-30T13:46:22","slug":"china-offers-sturdy-floor-in-gold-but-us-fed-meeting-risks-downside","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/07\/30\/china-offers-sturdy-floor-in-gold-but-us-fed-meeting-risks-downside\/","title":{"rendered":"China “Offers Sturdy Floor” in Gold, But US Fed Meeting “Risks Downside”"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Adrian Ash<\/strong>
\nBullionVault<\/strong><\/a>
\nTuesday, 30 July 08:30 EST<\/strong><\/p>\n

PRECIOUS METALS held in a tight range in London on Tuesday morning, moving sideways as world stock markets rose and commodities slipped ahead of the US Federal Reserve meeting, which begins today.<\/p>\n

\u00a0“No outstanding features, volumes fairly light and very little to report,” says broker Marex Spectron.<\/p>\n

\u00a0After telegraphing its intention to start reducing the $85 billion in monthly quantitative easing as soon as September, the Fed will announce its latest policy on Wednesday, soon after the release of official US data for second-quarter GDP.<\/p>\n

\u00a0Gold moved on Tuesday morning barely $4 per ounce above $1322 \u2013 the “crash” low of mid-April.<\/p>\n

\u00a0Silver moved just 0.7% around $19.70 per ounce.<\/p>\n

\u00a0“We could see some downside open up,” says Standard Bank’s commodities team, “if the Fed announces tomorrow that it will stay the tapering course.”<\/p>\n

\u00a0Looking at recent bullion price action, “Gold is pushing hard” says technical analysis from Commerzbank “into the 2-month downtrend and the 55-day moving average at $1333\/40.”<\/p>\n

\u00a0Gold bullion and futures prices “reacted violently in June” Federal Reserve comments on policy, says a note from Bank of America-Merrill Lynch. But now “near-dated gold volatility has been falling in recent weeks.<\/p>\n

\u00a0“After the initial Fed fears lifted 10-year US Treasury rates from 1.6% to 2.7% in just a few weeks, rates seem to have stabilized in a 2.5% to 2.6% range, contributing to a drop in gold vols.<\/p>\n

\u00a0This “normalization” says BAML is now being reflected in gold futures prices. August futures settled Monday below further-dated contracts<\/a>, confirming what the bank calls gold’s “typically contango structure” \u2013 whereby prices are higher for delivery further into the future.<\/p>\n

\u00a0But “we are moving closer and closer to tapering<\/a>,” reckons Tom Tucci, head of Treasury trading at CIBC World Markets, currently with $12bn in assets under management, speaking to Bloomberg.<\/p>\n

\u00a0“With no new news, the risk right now is for higher rates, not lower,” says Tucci, saying 10-year Treasuries should yield around 2.75% “given the state of the economy and the Fed’s stance.”<\/p>\n

\u00a0The quantity of gold bullion<\/a> held to back investors’ shares in exchange-traded trusts funds was unchanged Monday, remaining 25% lower from the start of 2013 at four-year lows.<\/p>\n

\u00a0Emerging-market central banks “disappointed gold bulls” with their bullion purchases in June, says a note from Swiss investment bank and London market-maker Credit Suisse.<\/p>\n

\u00a0“Reserve asset managers are as unwilling to ‘catch a falling knife’ as any other fund manager we think,” says the note, “and in general are wary of spikes in volatility.”<\/p>\n

\u00a0But in China \u2013 now the world’s second-largest economy, and likely to overtake India as world No.1 gold consumer<\/a> in 2013 \u2013 private household demand for gold bullion “does hold the promise of a sturdy price floor” says a note from fellow Swiss investment bank and London market-maker UBS.<\/p>\n

\u00a0Moreover, “In China banks are setting up and\/or growing gold accumulation plans offered to the public. Better and easier access to gold via banks’ growing networks combined with strong appetite from retail customers have driven the tremendous appetite from China this year.”<\/p>\n

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

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

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

(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 Tuesday, 30 July 08:30 EST PRECIOUS METALS held in a tight range in London on Tuesday morning, moving sideways as world stock markets rose and commodities slipped ahead of the US Federal Reserve meeting, which begins today. \u00a0“No outstanding features, volumes fairly light and very little to … <\/p>\n

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