Gold Trading "Thin" Below "Increasingly Important" $1200 Level as London Starts Christmas Holidays, Russia Grows Gold Reserves

[The Machine]

 

 

GOLD TRADING was quiet Friday in London, with prices moving sideways below $1200 per ounce as Asian equities closed higher but European stock markets held flat.

 

Crude oil rallied from this week's new 5-year highs, and weaker Eurozone government bonds also rose – pushing Spanish yields to new record lows – on what Bloomberg calls "speculation" the European Central Bank will start a QE program to buy debt in New Year 2015.

 

"Thin market conditions will likely persist towards the year-end holiday season," says one gold-trading desk in a note.

 

"Technically," says another, "gold is forming a wedge and looks likely to break one way or the other in the coming days."

 

"Gold prices are currently capped," says bullion market maker HSBC's analyst James Steel, "by a stronger Dollar and ongoing weak oil prices.

 

"Equity market gains further reduce the appeal of alternative assets like gold. Despite this, gold keeps challenging the $1200 level."

 

Fellow bullion bank ScotiaMocatta's technical analysts call $1200 per ounce "an increasingly important level of closing resistance," pointing to the "continued attempt and failure to break above this level on a closing basis."

 

Major currency pairs were also trading flat on Friday, but the Russian Ruble continued to rally from new all-time lows, erasing the last of this week's earlier 20% crash at fewer than 60 per Dollar.

 

"It appears possible that the Central Bank of Russia has started to sell off some of its gold reserves in December," claimed a new report from French investment bank and bullion market-maker Societe Generale late Thursday, saying "some sources reporting that official gold reserves dropped by $4.3 billion in the first week of the month."

 

That report, however – made by Business Insider mistranslating a Russian source last Friday – confused "FX and gold reserves" for just "gold reserves", and has since been corrected.

 

Data from the Central Bank of Russia today said its bullion holdings rose 1.6% in November to 1,188 tonnes, extending Moscow's near-record gold buying in 2014 to 152.5 tonnes.

 

Gold imports to India, the world's No.1 private consumer market, totalled that much in November alone.

 

"Our best guess [for 2015] is that gold continues falling," says a new note from UK stockbroker Brewin Dolphin's mining analyst Nik Stanojevic.

 

"Extrapolating trends since the second half of 2013, we get to a 2015 year end estimate of $1080," he says, citing "our house view of low inflation expectations and very modest increases in nominal interest rates."

 

Gold trading in Shanghai meantime fell back today, with volume in the main contract for wholesale metal in China – the world's top private buyer ahead of India in 2013 – dropping below this month's average level so far in Yuan terms, little more than half the near-record turnover of Friday last week.