Gold Prices Trim Week's Gain to 1.3%, Stock Market Extends Rally Post-Bullard

EDGWARE (Scrap Monster): Gold prices fell Friday afternoon in London, cutting the week's gain to 1.3% as world stockmarkets extended Thursday's turnaround from four days of heavy losses.

New data showed a surprise boost in US consumer confidence, while better-than-forecast Q3 earnings were reported by General Motors and also investment bank Morgan Stanley – appointed yesterday as the 13th market-making member of London's wholesale gold and silver market.

In a UK speech, meantime, Bank of England policymaker Andy Haldane echoed Thursday's comments from US Fed member James Bullard that central-bank policy may not be tightened from the currently record "easy" stance as soon expected.

"With the Fed keen not to rattle markets," said a note from analysts at London bullion market-maker Deutsche Bank this morning, "we believe the outlook for gold prices remains closely tied to the performance of US growth and the tone of Fed speak in coming weeks."

The Bank of Japan is struggling to find enough short-term government debt to buy with its $65 billion per month of quantitative easing, Bloomberg reports.

China's central bank was said late Friday to be planning a $33 billion injection of 3-month loans to major lenders, aiming "to keep liquidity ample and support the slowing economy," according to Reuters.

Gold-price premiums in Shanghai earlier closed the day around $1.40 per ounce, the lowest level since late August.

But trading volume in Shanghai's free-trade zone kilobar contract – launched in mid-September – leapt to new highs more than 3 times greater than the previous peak.

Equal to $100 million, turnover in that iAu9999 contract also equaled nearly 17% of dealing volume in Shanghai's main domestic gold product on Friday.

"We know the physical [Asian] gold market doesn't like volatility," says the London trading desk at Standard Bank, majority-owned by China's giant ICBC Bank. "But they also don't like higher prices."

"Gold is finding resistance on approach of $1243," says Standard's commodities analysis team separately.

Platinum prices earlier rose sharply, widening the premium over gold to $24 per ounce at the PM London Fixes after hitting 18-month lows near parity during Thursday's stockmarket slump.

Averaging $240 per ounce over the last 25 years, platinum's premium to gold hit $1200 in early 2008, falling to minus $200 at the peaks of the financial crisis in 2011 and 2012.

Silver prices meantime held near their lowest ratio to gold since February 2010, trading down to $17.26 per ounce in late London trade to lose 0.7% on the week.

Crude oil bounced hard, however, rallying almost 10% at one point from Thursday's new 4-year low in Brent contracts.

Courtesy: www.bullionvault.com