Gold Price Slips as Dollar ‘firmer,’ Crude Oil Rising, ‘Further ETF outflows’

Gold Price Slips as Dollar ‘firmer,’ Crude Oil Rising, ‘Further ETF outflows’
gold bar smuggling Photo by Phospheros

GOLD PRICE in Dollars slipped to $1345 per ounce on Friday at noon in London from a weekly high of $1358 on Tuesday, a level last seen two weeks ago.  The metal however has still added 0.7% on the week so far, as the US currency strengthened and crude oil prices rising.

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The U.S main indices finished higher on Thursday as did the Japanese Nikkei today. The Chinese Hang Seng was down. The main European stock exchanges were all trading down this afternoon.

US Crude Oil prices rose above $48 a barrel and were set to finish the week with the largest weekly gain in six months.

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The Euro versus Dollar exchange rate was $1.131 on Friday afternoon, a level last reached end of June erasing a near 2-month drop on Friday morning. The £/$ cross rose this week after the post-Brexit referendum multi-years fall, but was still hovering under the $1.33 level.

The Dollar index rose while a Fed official indicated that the US economy was able to stand another interest increase soon.

San Francisco Fed President John Williams said that it made sense to get back to an increase, “sooner rather than later“, on Thursday.

While the FOMC minutes released on Wednesday showed a split between policymakers regarding the rate hike timing, “The Fed could potentially move in December,” Roger Bridges from Nikko Asset Management in Sydney told Bloomberg, adding that “with uncertainty about U.S. inflation and monetary conditions around the rest of the world, the pace will be extremely measured.”

Investors will be looking for more hints when central bankers meet at Jackson Hole on August 26th, the chances for a rate hike this year stayed at 47%.

“The main factors weighing on the price are presumably the somewhat firmer US dollar and further [gold] ETF outflows of 1.3 tons,” agreed Frankfurt Commerzbank in a daily note, pointing also to a comment by New York Fed President in favour of a hike.

The ETF SPDR Gold Trust (NYSEArca:GLD) shed a further 1.8 tonnes on Thursday leaving total holdings standing at 956 tonnes, with outflows so far this week reaching 4.5 tonnes.

In contrast with the Dollar price, gold for Eurozone and British investors showed a double digit loss on the week at Friday midday and was set for a drop from July’s multi-years peaks of 4.6% and 4.2% respectively.

UK economic indicators for July published this week were as good as expected or even better, as the retail sales rose 1.5%, the jobless number dropped despite the expectations of an increase and the inflation rate did not surprise the market.

“Shoppers shrug off Brexit gloom,” wrote the Financial Times despite the Brexit hit on business sentiment.

The year-on-year UK Core Consumer Price Index of July slightly decreased from June at 1.3%, a level not deviating from the general consensus figure, shown by statistics published on Tuesday.

Platinum prices eased back as did the silver prices in Dollars set to close the week 1.42% lower at $19.43 per ounce, a 4-week level already breached once this week on the way down.

In Rio 2016, while Team US medal tally reached 100, team GB ranked second with 22 gold medals out of 56, currently 9 fewer than in London 2012 Olympics. See our infographic on the medal count for 120 years of Olympics.

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  1. “The ETF SPDR Gold Trust (NYSEArca:GLD) shed a further 1.8 tonnes on Thursday leaving total holdings standing at 956 tonnes, with outflows so far this week reaching 4.5 tonnes.”

    How reliable are GLD’s holding reports? GLD does not give retail investors the right to redeem for any of its mystery physical gold holdings. This fact alone ensures the GLD shares to be nothing more than paper at the end of the day. GLD also has a glaring audit loophole in their prospectus that states they have no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this backdoor to the fund. Some other red flags I’ve stumbled upon, verified and welcome everyone else to verify for themselves:

    “Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD’s insurance? The prospectus vaguely states “The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody.” When I asked about how much of the gold was insured, the representative proceeded to act as if he didn’t know and said they were just the “marketing agent” for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.

    I remember there was a highly publicized visit by CNBC’s Bob Pisani to GLD’s gold vault. This visit was organized by GLD’s management to prove the existence of GLD’s gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this “GLD” bar was actually owned by ETF Securities.”

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