Daily gold report: Wednesday 27th June
The international spot gold market held above $641 in the first-half of London trade on Wednesday. But after Tuesday's $10 sell-off, 'gold hits 3-month low as investors flee risk,' reports Reuters.
07:27 EST
THE INTERNATIONAL spot gold market held above $641 in the first-half of London trade on Wednesday. But after Tuesday's $10 sell-off, 'gold hits 3-month low as investors flee risk,' reports Reuters.
Today's AM Fix came in at $642.85 per ounce the lowest gold price in Dollars since March 5th. For British investors wanting to buy gold today, the metal on Wednesday dipped below £322 per ounce. French and German investors found the metal trading below €478.50 also a 5-month low.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Why the plunge in gold, traditionally viewed as a 'safe haven' asset? The metal has now sunk three times as the Japanese Yen has risen, losing out alongside a sell-off in stocks and the broader commodity markets.
Although it's impossible to quantify, the size of long-gold positions held by Japanese investors and institutions able to borrow Yen at near-zero rates to fund speculative trades for more than a decade is clearly hurting the gold price every time the Yen bounces.
Overnight the Japanese Yen pushed back the Dollar by 0.4%. It rose that much versus the Euro too, which had previously hit a fresh life-time high against the Japanese currency.
The Nikkei stock index in Tokyo dropped 1.2% today to record its lowest close in two weeks. The European bourses ticked lower Wednesday morning. Wall Street futures also pointed lower following a 2.4% drop in the Dow Jones US Home Construction Index on Tuesday.
That move came on data showing the price of new US homes dropping 2.1% year on year in May. The number of US home-buyers now late with one outstanding mortgage payment is at a 13-year high according to the Federal Deposit Insurance Corp.
Now defaults on subprime US mortgage loans will 'grow and grow like a weed' according to Bill Gross, head of the world's largest bond fund, Pimco. His latest note to Pimco clients also warns about the looming collapse of the market in collateralized debt obligations (CDOs) complex credit derivatives often issued against bonds backed in turn by residential mortgage loans.
Speaking of the credit-rating agencies that approved many CDOs are investment-grade debt, Gross writes: 'AAA? You were wooed, Mr. Moody's and Mr. Poor's, by the makeup, those six-inch hooker heels and a 'tramp stamp'. Many of these good looking girls are not high-class assets worth 100 cents on the Dollar.'
In the broader markets, copper also fell for the fourth session running today, while zinc futures traded in Shanghai dropped 4%. Rubber and palm oil both fell overnight, while platinum has now lost more than 2.1% from yesterday's opening. Silver prices, the first precious metal to begin dropping on Tuesday, have now lost nearly 6% from yesterday's London start.
'Behind the slump in the New York gold market [on Tuesday] is risk aversion,' reckons Satoshi Matsunaga, analyst at Mitsui Bussan Futures in Tokyo. 'Unwinding of Yen carry trades is going on.'
Tokyo gold futures dropped 2% at the Tocom today. The world's biggest gold ETF, StreetTracks GLD, recorded net redemptions of 11 tonnes from the bullion it holds in trust for US investors since Monday.
'Gold has dropped down to its 200-day moving average which seems to be providing some support,' says Phil Smith for Reuters India Market Technicals today. He puts the next level of support in the gold market around the March low of $632.30 per ounce.
If you'd like to buy gold bullion at today's 3-month Dollar discount, be sure to visit BullionVault for live spot prices and low dealing fees today.
Adrian Ash is editor of Gold News and head of research at www.BullionVault.com, the fastest growing gold bullion service online
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
Adrian has written all things gold related from if it’s worth buying, what the real price of gold should be and what’s the point of gold for MoneyWeek. He has also written for other leading money titles on his gold expertise including Business Insider, Forbes, City A.M, Yahoo Finance and What Investment Magazine. Now Adrian is head of the research desk at BullionVault, a physical market for gold and silver for private investors online.
-
Why did Britain give the Chagos Islands back?
What is the deal with the Chagos Islands and what role do the Tories play?
By Emily Hohler Published
-
Is Brevan Howard Macro a good investment?
Holding Brevan Howard, a world-leading vehicle through an investment trust, offers diversification on the cheap
By Rupert Hargreaves Published