Gold Sees Further Gains, 8-Year UK Peak

Gold Prices Extend US Fed’s ‘Cut Coming’ Gains, UK Gold Hits 8-Year Peak

Adrian AshBullion.Directory precious metals analysis 11 July, 2019
By Adrian Ash

Head of Research at Bullion Vault

GOLD PRICES held onto yesterday’s near-$30 jump in Asian and London bullion trading on Thursday, moving above $1420 per ounce after the chairman of the US central bank signalled rate cuts are about to begin.

Euro gold prices came within 5 of last week’s new 6-year highs, touching 1266 per ounce.

The UK gold price in Pounds per ounce touched a new 8-year high above £1140 per ounce, up 13.1% from New Year’s Eve.

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Western stock markets slipped after Asia followed Wall Street to close slightly higher overnight.

Major government bond prices also eased back, cutting the cost of owning 10-year German Bunds to 0.25% per annum after Berlin’s debt set a new negative record yield of -0.40% last week.

Betting however rose on a half-point rate cut from the US Federal Reserve at this month’s meeting, pricing it near a 1-in-3 chance against a smaller quarter-point cut according to data from US derivatives exchange the CME.

Last month’s plunge in bond yields worldwide saw gold-backed ETF trust funds grow 15% by value, new analysis from the mining-industry’s World Gold Council said Thursday, the “largest monthly increase in 7 years.

wgc-etf-jun-19 alt=”Monthly gold ETF inflows in tonnes. ” />
Source: World Gold Council

“All regions experienced inflows” in June, the WGC says, with percentage growth led by WisdomTree’s ETFS Physical Swiss Gold fund (LON: SGBS) more than doubling in size.

Without confirming the size of July’s cut, US Fed chair Jerome Powell yesterday told Congress that he thinks cuts are needed to short-term interest rates.

Powell also said social-media giant Facebook’s payments system Libra “cannot go forward” until “serious concerns” are addressed, and said he won’t quit as Fed chair if asked to resign by President Trump – now a vocal critic after nominating him only in 2017.

“Powell’s testimony made sure that there is a rate cut on the cards this month,” Reuters quotes Singapore bank OCBC’s economist Howie Lee.

“He has provided a loser monetary policy base for gold prices gain further.”

New data today said inflation in Germany was stronger than analysts expected in June, but rising to 1.5% the annual rate badly lagged the European Central Bank’s target of 2.0%.

Crude oil meantime extended its rally, reaching $67.60 per barrel of Europe’s Brent benchmark, after the British Royal Navy said it prevented Iran from seizing a UK tanker passing through the Persian Gulf.

The Bank of England said this morning it has seen “some improvement in the preparedness of the UK economy for no-deal Brexit,” now scheduled for 31 October.

This article was originally published here
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