Gold price comes off 3-mth high but remains steady

Otmane El Rhazi from The Bullion Desk.

The gold price softened during Wednesday morning sessions, coming off the three month highs it hit yesterday, but remaining steady and largely ignoring the turmoil in wider markets.

Spot gold was last at $1,229.40/1,230.10 per ounce, a $3.40 decline on the previous day’s close. Yesterday, the yellow metal reached a three-month high at $1,244.50, before closing softer at $1,232.80.

“Precious metals did well yesterday, especially gold and given so much uncertainty there is in the markets and on the geopolitical front with the Greek election only weeks away and the stand-off going on within OPEC, we expect gold to remain well supported and that should help underpin the rest of the precious metals complex, especially with platinum and gold trading near level.,” said FastMarkets’ analyst William Adams.

“Puzzling as gold’s swings were on Tuesday, our overall theme for the precious metal remains intact, namely, that we remain moderately bullish on prices moving forward given that we are not sure the selloff in crude is entirely behind us, or that further matter, whether the recent wobbles in the US equity markets are over either,” added INTL FCStone analyst Edward Meir.

In currencies, the dollar was holding firm at 1.777 against the euro.

Wider markets have been volatile of late, with oil prices slumping to fresh five year lows and choppiness in equities.

Yesterday, the Euro Stoxx 50 closing up 1.6 percent, the Dow was up 1.6 percent at the day’s high before falling to being down 0.8 percent and closing down 0.2 percent. Asia is weaker too as the market catches a glimpse of what is happening to ‘doctor copper’ with the Nikkei off 1.7 percent (the stronger yen an factor here too), the Hang Seng is down 0.4 percent, the CSI is down 0.6 percent and the Kospi is down 0,2 percent.

Elsewhere, the industrial metals have posted a mass sell-off, which saw many of the metals hit multi-month and multi-year lows in early Asian sessions as copper prices slumped.

Adding to the general gloomy sentiment was news that The World Bank has cut its 2015 global growth forecasts to 3 percent from 3.4 percent due to persistently weak global trade; the possibility of financial market volatility as interest rates in major economies rise on varying timelines; and the ongoing period of stagnation or deflation in the eurozone and Japan.

“Worryingly, the stalled recovery in some high-income economies and even some middle-income countries may be a symptom of deeper structural malaise, Kaushik Basu, World Bank chief economist, said.

In data, French CPI disappointed at 0.1 percent. Later the EU will release its industrial production numbers.

The US has core retail sales, retail sales, import prices, and business inventories scheduled. Overnight, Japan will release its PPI numbers.

Silver at $16.79/16.84 was down on the previous close of $17.04. Platinum was $9 lower at $1,231/1,236 and palladium fell $20 to $794/799.

(Additional reporting by Tom Jennemann)

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