Gold Prices Hold Asian Rally, Near 2014 Highs in Euro Terms

[The Machine]

 

 

GOLD PRICES held onto a rally in Asian trade Tuesday lunchtime in London, rising to the highest level since Thursday near $1290 per ounce.

 

Silver tracked and extended the rally in gold prices, recovering almost all of last Tuesday's 1.5% drop to touch $19.69 per ounce.

 

World stock markets also rose, with New York's S&P 500 index set to open just shy of a new record at 2,000 points.

 

Gold prices for Euro investors meantime held above €975 per ounce – within 3% of this year's highest level – as the single currency finally steadied below $1.32, a new 11-month low to the Dollar.

 

Stressing that Eurozone rules prevented its 18 member states from "backloading" fiscal reform in the same way the US and Japan have, European Central Bank president Mario Draghi vowed on Friday to "use all the available instruments" to avoid deflation in consumer prices.

 

The ECB meets next week to set rates and further outline its bank lending programs.

 

Apparently speaking to German concerns over quantitative easing and other "extraordinary" measures, "All countries should have an interest in achieving...cohesion" Draghi added.

 

"Dollar very strong," says one bullion bank in a note. "Hard to see precious metals sustain rally in this environment."

 

The gold price, agrees Germany's Commerzbank, "is still facing headwinds from the firm US Dollar," adding that Tuesday's rally "presumably [comes] on the back of the many sources of geopolitical crisis."

 

Moscow and Kiev spokesmen today traded differing stories over the capture of 10 Russian paratroopers inside Ukraine.

 

Russian president Putin today shook hands at a meeting in Minsk with Ukrainian leader Poroshenko – who Monday called snap elections for October.

 

Moscow yesterday reported a fourth monthly rise in its official gold bullion holdings, adding over 10 tonnes to reach 1,104 tonnes.

 

Rising to the highest level in at least two decades, Russia's gold hoard now outweighs the official reserves of China – widely seen as under-reported by Beijing in a bid to deflect market attention from continued accumulation by the world's largest holder of foreign exchange reserves.

 

Gold imports to China through Hong Kong fell last month to 21 tonnes, the lowest level since mid-2011, new data showed Tuesday.

 

Year to date, Chinese gold imports through Hong Kong now stand 25% below 2013's record levels, and while the newly opened route via Shanghai's free-trade zone means the Hong Kong data may "no longer paint a full picture of Chinese gold imports," notes Commerzbank, recent forecasts of 1,000 tonnes for full-year 2014 from market development group the World Gold Council "may prove to be overly optimistic."

 

The Shanghai free-trade zone has already beaten its target membership for a new Yuan-denominated, international gold exchange to be launched this fall.

 

"It is too important a market to stay away," Reuters quotes Swiss refiner Argor-Heraeus director Bernhard Schnellmann, which is apparently thinking of joining.

 

Gold prices on the domestic Shanghai Gold Exchange closed Tuesday higher more than $3 per ounce above comparable London quotes – near the highest Shanghai gold premium of 2014 to date.