Gold Due For Rally As Negative Sentiment Reigns - Frank Holmes

Gold prices were trying to benefit Monday from a sharp sell-off in the Chinese equities overnight. China’s stock market saw the biggest one-day drop in eight years, as the Shanghai composite index closed 8.5% lower Monday. “There is so much manipulation, someone is front-running or trying to manipulate the price against an already building short position – now it appears to be a crowded trade of excessive shorting in gold and we are due for a rally ,” says Frank Holmes, CEO at U.S. Global Investors. “It appears there are two things that happened last week- someone knew that the Flash PMI out of China was going to be negative and they hit the market a week ago and it seemed to be synchronized,” he says. During Asian trading hours last week, investors dumped more than $500 million worth of bullion in New York in a matter of seconds, with selling occurring almost simultaneously on Chinese markets, Holmes explains. “The sheer scale of order flow across both the Shanghai Gold Exchange and the Shanghai Futures Exchange, where combined volume on Monday surpassed the notional equivalent of 250 tons, led many market trackers to speculate that Chinese hedge funds were behind the move,” Holmes says. The selling pressure in China is coming amid concerns the Chinese government will not continue its recent efforts to prop up Chinese share prices, including forcing sellers to the sidelines and limiting trading in some shares. Holmes adds we could see a gold rally as early as this week. “All this talk about rates going to rise is bizarre because ten-year government bonds are making a new low, lower than a year ago and lower than two years ago - I don’t see anything for them to go higher with,” he says ahead of this week’s Federal Open Market Committee (FOMC) meeting, which begins Tuesday morning and ends with the release of its monetary policy statement Wednesday afternoon. Tune in now for more comments from U.S. Global Investors' CEO Frank Holmes. Kitco News, July 27, 2015.