1. Gold prices hit 4-week high on weak dollar, Brexit worries

Gold prices hit 4-week high on weak dollar, Brexit worries

Gold prices touched a four-week high on Monday, supported by a weaker dollar and a slide in Asian stocks ahead of key central bank meetings this week and a June 23 referendum on Britain's exit from the European Union.

By: | Benagaluru | Updated: June 13, 2016 4:54 PM
Gold prices Gold prices touched a four-week high on Monday, supported by a weaker dollar and a slide in Asian stocks ahead of key central bank meetings this week and a June 23 referendum on Britain’s exit from the European Union.(Photo: Reuters)

Gold touched a four-week high on Monday, supported by a weaker dollar and a slide in Asian stocks ahead of key central bank meetings this week and a June 23 referendum on Britain’s exit from the European Union.

The US Federal Reserve, Bank of England, Swiss National Bank and Bank of Japan will all meet this week, and are expected to hold monetary policy steady against a backdrop of caution about the global economic outlook as well as the impact about a possible “Brexit”.

Often perceived as a hedge against economic and financial uncertainty, gold has so far gained 5 per cent in June and 20 per cent for the year. Spot gold rose 0.6 per cent to $1,281.96 an ounce at 0647 GMT. Bullion earlier touched a session best of $1,284.20 an ounce, its highest since May 16. US gold was up 0.7 percent at $1,285.10.

“The market is full of uncertainty over Brexit and also over the interest rate decision by FOMC (the Federal Open Market Committee) as well as other regional concerns,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

“Gold has been up and $1,300 should be an immediate target at least for the coming week, with $1,240 being the support level.”

Asian stocks fell the most in more than four months and the Japanese yen jumped on Monday as risky assets took a beating, boosting the precious metal. The dollar fell to a one-month low against the yen and stood at 106.03 yen, down about 0.9 percent. Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.74 percent to 893.92 tonnes on Friday, the highest since October 2013.

Speculators raised their net long position in COMEX gold contracts in the week to June 7, and cut their bullish stance in silver, U.S. Commodity Futures Trading Commission data showed.

“Gold could push a little higher during the early part of the week, but we expect it to hit some turbulence by Wednesday, the day of the Fed meeting,” said INTL FCStone analyst Edward Meir in a note.

“That is when we expect the bank to signal that it is warming up to a rate increase for July,” he said, adding a lack of a clear signal from the U.S. central bank could lead to further gains in gold. Among other precious metals, spot silver fell 0.5 per cent to $17.23 per ounce, while spot platinum was up 0.2 per cent at $991.51 per ounce and spot palladium rose 0.3 per cent to $544.16 per ounce.

  1. G
    Geo
    Jun 13, 2016 at 1:08 pm
    "Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.74 percent to 893.92 tonnes on Friday, the highest since October 2013."I always see Reuters referencing this question data point but how reliable are GLD's holding reports? GLD does not give retail investors the right to redeem for any of its mystery physical gold holdings. This fact alone ensures the GLD shares to be nothing more than paper at the end of the day. GLD also has a glaring audit loop in their prospectus that states they have no right to audit subcustodial gold holdings. To this day, I have not heard of a single good reason for the existence of this backdoor to the fund. Some other red flags I've stumbled upon, verified and welcome everyone else to verify for themselves:"Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors.I remember there was a highly publicized visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."
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