Gold prices rise as rally in shares loses steam

By Sethuraman
Reuters

Gold prices edged up on Thursday, after touching their highest since September in the previous session, buoyed as a rally in equities appeared to falter.

Spot gold was up 0.1 percent at $1,317.93 an ounce by 0655 GMT. On Wednesday, it marked its lowest since Sept. 15 at $1,326.56 an ounce. U.S. gold futures were down 0.1 percent at $1,319.10 an ounce.

“Rising oil prices and strong global growth suggest gold will remain supported as investors look for inflation protection,” said Stephen Innes, APAC head of trading at Oanda. “Also, a highly-anticipated stock market correction is providing support on dips which continues to support the bullish gold narrative.”

Oil prices held near three-year highs on Thursday, buoyed by a surprise drop in U.S. production and lower crude inventories.

The New Year rally in Asian shares petered out on Thursday due to concerns about rising U.S. protectionism.

“Gold could test $1,327 in the short term and above which $1,362 will be opened … Global equities are running at a high level of exuberance, confidence and valuation … which in short stands for a bubble,” said Amit Kumar Gupta, portfolio management services head at Adroit Financial Services.

“The belief ‘this time it is different’ is all set to get a rude shock.”

Spot gold looks neutral in a range of $1,311-$1,329 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

“We feel that there will be sellers on rallies,” said MKS PAMP Group trader Alex Thorndike.

“That being said, as Chinese seasonal buying picks up (ahead of the Lunar New Year), the downside should remain supported into February.”

Meanwhile, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.35 percent to 828.96 tonnes on Wednesday from Tuesday. Holdings fell for a second straight day on Wednesday.

Among other precious metals, spot silver rose 0.2 percent to $17.01 an ounce. Prices fell to the lowest in nearly two weeks at $16.86 on Wednesday.

Platinum was mostly unchanged at $968.24 an ounce, after touching its highest in nearly four months at $974 in the last session.

Palladium climbed 0.1 percent to $1,084.40 an ounce, after seeing its worst one-day fall in over a month on Wednesday. Palladium, which rose to a record of $1,111.40 on Tuesday, fell 1.5 percent the session before.

  • George

    “Meanwhile, holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.35 percent to 828.96 tonnes on Wednesday from Tuesday. Holdings fell for a second straight day on Wednesday.”

    Sethuraman, I frequently see you making these claims but I still have yet to see you provide any verifiable evidence to support any of it. 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.”