{"id":43480,"date":"2013-10-28T10:23:19","date_gmt":"2013-10-28T14:23:19","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=43480"},"modified":"2013-10-28T10:23:19","modified_gmt":"2013-10-28T14:23:19","slug":"urge-dump-gold-finished-us-fed-turns-dovish-diwali-begins","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/10\/28\/urge-dump-gold-finished-us-fed-turns-dovish-diwali-begins\/","title":{"rendered":"Urge to “Dump Gold” Finished as US Fed “Turns Dovish”, Diwali Begins"},"content":{"rendered":"

London Gold Market Report<\/strong>
\nfrom Adrian Ash<\/strong>
\nBullionVault<\/strong><\/a>
\nMon 28 Oct 08:25 EST<\/strong><\/p>\n

WHOLESALE London prices of gold sat tight Monday morning, holding onto Friday’s 6-week closing high as European stockmarkets failed to continue a rise in Asian shares.<\/p>\n

\u00a0Silver was unchanged with commodities, major government bonds and gold, sitting at $22.58 per ounce by lunchtime.<\/p>\n

\u00a0The US Dollar rallied after hitting a new 9-month low on its trade-weighted index against major competitor currencies.<\/p>\n

\u00a0Gold last week enjoyed its strongest rise in almost 3 months, adding 2.6% as silver rose 2.9%.<\/p>\n

\u00a0“Gold’s ascent above $1350, to one-month highs, has been driven by investor interest,” says a note from Barclays Capital, pointing to the “largest daily increase” in exchange-traded gold funds, which give investors exposure to the metal’s price without them taking physical ownership, since January.<\/p>\n

\u00a0Over the week as a whole, however, the largest gold ETF \u2013 the SPDR Gold Trust listed in New York (ticker: GLD), as well as in Hong Kong and other financial centers \u2013 saw its holdings drop 10 tonnes, hitting new 54-month lows of 871.<\/p>\n

\u00a0The GLD started 2013 with near-record holdings of 1,350 tonnes, before shedding 380 tonnes as prices crashed in the first half of the year.<\/p>\n

\u00a0“There’s not much reason anymore to dump gold further,” says one London trading desk in a note, “[not] while the US Fed renews its dovish stance<\/a> after a miserable attempt at the medium-rare hawk side of things.<\/p>\n

\u00a0“In truth, the USA are cornered by a sluggish growth.”<\/p>\n

\u00a0The US central bank begins a two-day meeting on Tuesday, announcing its monetary policy on Wednesday. Many analysts now expect it to stick with $85 billion of monthly quantitative easing.<\/p>\n

\u00a0Looking at short-term interest rates, now held at zero for almost four years, “the implied yield on the Fed funds futures contract<\/a> for December 2015 has fallen from a recent peak of 1.45% percent to 0.65%,” says Reuters, “highlighting that investors have scaled back rate hikes expectations in 2015 and beyond.”<\/p>\n

\u00a0“There’s no real indication,” said Thomas Capalbo at New York brokers Newedge, speaking after Friday’s weaker-than-expected US data, “that things are getting much better, and no indication saying that we are going to see tapering soon.<\/p>\n

\u00a0“So that’s going to be beneficial for gold and probably silver too.”<\/p>\n

\u00a0US regulator the CFTC is currently three weeks behind with its Commitment of Traders data for gold and silver futures, owing to this month’s debt-ceiling shutdown.<\/p>\n

\u00a0Gold in India \u2013 the world’s heaviest consumer nation \u2013 meantime held near record highs above international benchmarks on Monday, with the premium in Mumbai at $120 per ounce.<\/p>\n

\u00a0The peak gold-buying festival of Diwali begins on Saturday. After surprising market analysts with a small interest-rate rise in September, Reserve Bank of India governor Raghuram Rajan will announce the latest policy move on Tuesday.<\/p>\n

\u00a0“Impact of high gold premiums will be there on prices on the [start of Diwali] Dhanteras day,” says Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation, “because supplies have dried up in the absence of imports in the last three months due to government curbs.”<\/p>\n

\u00a0Jewelry sales are stable from Diwali last year, says Soni, but sales of investment gold bars<\/a> and coins are running at half 2012 levels.<\/p>\n

\u00a0Former president of the Bombay Bullion Association Suresh Hundia disagrees, says MoneyControl, putting India’s jewelry sales down by 60%, with coin and gold bar sales 70% lower.<\/p>\n

\u00a0“Government has banned import of bars and coins,” says Hundia. “So, there is no supply to meet the demand<\/a> for such items on the festival day.”<\/p>\n

\u00a0The Times of India today reports what it calls a “treasure trove” of mineral resources<\/a> discovered in Uttar Pradesh, including up to 0.25 tonnes of gold.<\/p>\n

\u00a0India last year imported some 845 tonnes of gold to meet domestic demand.<\/p>\n

\u00a0Smuggling may have increased by 50% so far in 2013<\/a>, reports the New Indian Express.<\/p>\n

\u00a0The number of Indian customs gold seizures is little changed from 2012, the Business Standard says, but the value of those hauls has jumped by well over 300%<\/a>.<\/p>\n

\u00a0Over in China, meantime premiums on the Shanghai Gold Exchange briefly went negative overnight, recovering to $1.50 per ounce above London spot gold prices but down from this spring’s record levels of $30.<\/p>\n

\u00a0Next month’s planning meeting for Beijing’s politburo will see “unprecedented” reforms, according to Yu Zhengsheng, the fourth-highest member of the Communist Party’s Standing Committee.<\/p>\n

\u00a0Interbank interest rates rose again in Shanghai today, taking the annualized cost of 1-month money to 6.48%, the highest level since June’s spike to double digits.<\/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 fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich 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

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 <\/p>\n

 <\/p>\n

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

London Gold Market Report from Adrian Ash BullionVault Mon 28 Oct 08:25 EST WHOLESALE London prices of gold sat tight Monday morning, holding onto Friday’s 6-week closing high as European stockmarkets failed to continue a rise in Asian shares. \u00a0Silver was unchanged with commodities, major government bonds and gold, sitting at $22.58 per ounce by … <\/p>\n

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