Precious metals prices ticked higher in early morning trading in London on Tuesday, as the market consolidated following the battering in the previous session.
Spot gold was last at $1,108.20/1,109.00 per ounce, up $11.50 on the previous session where it hit fresh five-year lows. The metal however continues to look vulnerable, having hit depths of $1,085 on Monday.
“With sentiment in precious metals having been severely undermined yesterday, the complex remains vulnerable to further declines in the short-term, especially if ETF selling continues to gather pace and the net spec positioning does not improve significantly,” FastMarkets analyst Boris Mikanikrezai said.
Gains so far today appear to be a counter to the strong moves seen in the previous session, with bargain-hunters in particular from emerging markets picking up on the weaker prices – though some traders have noted that physical buying has yet to truly react to the recent price slump.
Analysts remain mixed on the catalyst behind the near-five percent liquidation seen in the previous session, though expectations of a near-term interest rate rise in the US appear to have underpinned the worsening sentiment.
Adding to the already strengthening case for the 2015 rate rise, James Bullard, president of the St. Louis Fed, commented that the Fed’s rate hike was “more than a 50 percent probability right now” in an exclusive interview with FOX Business Network.
“On the subject of the first Fed hike, the Fed’s Bullard noted that while next week might be a little early for the Fed to raise rates, the probability of a Fed lift-off in September is above 50 percent,” said ANZ.
“The Fed is trying to be data-dependent in deciding when to tighten, but interest rates will probably rise if the economy stays on track for three percent growth in the second half,” it added.
Still, the dollar is looking marginally weaker this morning at 1.0855 against the euro and all European indices are just into negative territory for the session so far.
Furthermore, HSBC’s James Steel says that he doesn’t expect another dose of heavy selling any time soon.
“The severity and concentration of recent selling was unusually strong and we do not expect a repeat,” he said.
In gold-centric news, Russia has increased its gold reserves once again, following a two-month respite. The central bank bought 24 tonnes of gold in June, bringing overall first-half purchases to 67 tonnes.
Its total gold reserves now stand at 41 million ounces or around 1,275 tonnes, according to a statement on its website – making it the seventh largest holder of the metal in the world, following news that China disclosed the first increase to its reserves in six years last week.
In other metals, silver was last up around 1.4 percent at $14.83/14.88 per ounce. The metal’s 20 cent increase today comes after hitting six-year lows on Monday morning. The PGMs are also rebounding, platinum was last up $16 at $987/992 per ounce while palladium was up $12 at $616/621.
There are no economic numbers of note due for release today.
(Editing by Martin Hayes)
The post Precious metals rebounding, Russia back in the market for gold appeared first on The Bullion Desk.
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