In Depth

Gold price waits for rates clues from Jackson Hole

Political turmoil in the US has the potential to 'help gold in the short and longer term'

Gold rises again as the dollar wanes

20 April

The price of gold continued its rising streak today, while the US dollar and oil both fell.

Daily FX says the precious metal reached a one-week high of $1,258.13 an ounce, while silver climbed to a ten-month high and platinum hit a six-month max. All three metals are seen as safe-haven investments in troubled economic times.

Investors fled from oil this morning after Kuwaiti workers called off a strike which had promised some relief to the global oversupply. They are still smarting from the failure of last weekend's summit to agree a production freeze.

Meanwhile, the US dollar is continuing a long slide down relative to other currencies - it recently touched an 11-month low. The latest disappointing US housing data also did little for the greenback.

Gold is priced in dollars, so a weak dollar makes it more attractive, says BullionVault, and the first three months of this year represent gold's single best quarter in 30 years. Year-on-year, the metal is up 17.2 per cent today.

Its rise is even prompting some analysts to say gold is entering a bull market phase. Precious metals expert Dr Diego Parrilla has warned that a "perfect storm… is brewing".

The uncertainty in world financial markets so far this year has pushed investors towards safer assets, especially the metal, and Parrilla said last week that it could overtop $3,000 an ounce this year, Mining.com reported.

The last time gold entered a bull market, in September 2011, it reached its all-time peak of £1,900 an ounce. Since 1970, there have been five gold bull markets, each lasting an average of 63 months and returning an average 385 per cent, says BullionVault.

Gold stays strong despite oil's bounce back

19 April

The price of gold has stayed strong in trading today, despite a bounce-back in the oil price yesterday.

In the US, June Comex was up $17.50 at $1,252.40 an ounce at 1.42pm UK time, while in London, the LBMA gold price was held at $1,241.70 at 10.30am UK time.

The metal has been buoyant in recent months and the price rose yesterday as buyers sought a traditional safe-haven investment after disappointment in the oil markets - a failed summit on supply at the weekend led the price to plummet.

Oil's fall was good news for gold, with Spot gold peaking at $1,239.30 an ounce in Asia trading.

But the mass sell-off in oil that some analysts expected did not happen: the news that Kuwaiti workers had gone on strike, meaning a reduction in the global supply, pushed prices back up again later in the day.

However, gold has held firm and is posting "good gains" while remaining "solidly higher", says Forbes. Silver also did well, up $0.672 at $16.93 an ounce in early US trading, a ten and a half-month high.

One of the reasons for the better-than-anticipated performance might have been a weak US housing report released today, says Forbes, which saw gold hit a daily high.

Gold price rises after failed summit sees oil slump

18 April

The gold price has been buoyant in recent months – and it experienced a fresh increase today as the market reacted to yet another slump in the value of oil.

Spot gold peaked at $1,239.30 an ounce in Asia trading, before calming back down to $1,236.20 for a 0.2 per cent gain by 7.39am UK time. That followed a 0.5 per cent gain on Friday, although the price fell overall for the week.

Today's rally comes in response to the news that the world's major oil producers failed to agree a limit on production following their meeting in Doha, Qatar, at the weekend. With oil down, yet again, investors are seeking safety in gold.

But the slump in oil isn't the only reason the commodity has done well. A new feeling of optimism about China's economic slump - that it might be bottoming out - is also helping prices, analysts say.

Don't expect the current resurgence to last long though, warns Rolf Schneebeli, of Gold Services AG, because "the market is again looking at the dollar, meaning that when the dollar is strengthening, the gold price is dropping in dollar terms".

Schneebeli told Gulf News: "In addition, the technical indicators for the gold price look quite vulnerable right now. So, overall, for [this week], there is a slightly higher likelihood for lower prices."

In the longer term, says the Daily Telegraph, to "assess whether gold's resurgence is here to stay, it is important to look at who has been buying it". Central banks have been involved, but "more importantly", investors - private and institutional - have been flocking back.

They're buying gold because of the market turmoil worldwide so far this year and because they have lost faith in the ability of central bankers in Europe and Japan to stimulate growth.

As long as the difficult macro-economic climate persists, gold will enjoy its status as a safe haven.

Gold price set for first weekly drop in three

15 April

Gold steadied today after three days of decline, but appeared to be headed for its first weekly drop in three.

The precious metal had hit a three-week high on Tuesday, but soon lost those gains as the "strength in the dollar and global equities curbed appetite for the safe-haven metal", Reuters says.

Spot gold steadied at $1,230.50 an ounce by 10:02 GMT, after falling 1.3 per cent in the previous session. It is down one per cent for the week.

Despite the drop, demand and speculative buying interest "could push gold to new 2016 highs in the next month or so," said Boris Mikanikrezai, a metals analyst at FastMarkets.

In data released overnight, the US labour market continued to show strength, but the US Federal Reserve is still exercising caution in its rate hike plans, BullionDesk.com says.

"Despite the strengthening labour market in the US and real labour earnings growth, signs of a definitive firming trend in US inflation remain elusive," said ANZ.

"If views on the inflation outlook firm and Treasury yields snap higher, brace for market fallout as asset values are reassessed," the bank added.

Gold price rises as dollar weakens and Fed appears dovish

12 April

The price of gold hit a three-week high today, partly because of the falling dollar, which slumped to an eight-month low.

The greenback has been down since the US Federal Reserve chairwoman, Janet Yellen, said last month that she will keep interest rates lower for longer than many investors had hoped.

The low dollar has pushed buyers towards dollar-priced assets – including gold. The precious metal reached a high of $1,262.60 an ounce before easing back to $1,258.46 an ounce by 11.30am UK time - a rise of 0.1 per cent.

Gold futures for June delivery, meanwhile, rose $2.60 an ounce to $1,260.60. Silver also did well, rising above $16 an ounce for the first time in almost a month. It touched $16.06 at one point, before falling back to $16.02 – a rise of 0.8 per cent.

Platinum also rose, climbing 0.6 per cent to $994 an ounce, while palladium was up 0.7 per cent at $549.05 an ounce.

"Negative yields in my opinion remain the key reason for buying gold, and silver. That story will not go away," Ole Hansen, of Saxo Bank, told Reuters.

"[Gold] found the expected resistance at $1,255 and it was only when silver took off that it managed to get through.

"Silver ETF [exchange traded fund] holdings have risen strongly this past month while gold has been almost flat. That could indicate some switch in focus to silver, and the move yesterday highlighted that."

 

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