Gold Nears 10% Monthly Gain Ahead of Fed Decision as US Economy Surges, Inflation Flatlines

London Gold Market Report

from Adrian Ash, BullionVault

Wednesday, 31 July 09:15 EST


Gold Nears 10% Monthly Gain Ahead of Fed Decision as US Economy Surges, Inflation Flatlines


The PRICE of wholesale gold fell back to $1320 per ounce Wednesday lunchtime in London as new data showed the US economy expanding faster-than-expected.


Second quarter GDP rose 1.7% in real terms from a year earlier, the Bureau of Economic Analysis said.


Inflation in consumer goods and services fell to 0.0%.


Falling almost $20 from an earlier 1-week high, the gold price at $1320 dropped back to its crash low of mid-April, when prices tumbled $250 per ounce in 3 sessions.


The US Dollar had today already jumped half-a-cent against both the Euro and Sterling – and driven the Brazilian Real to 4-year lows – after strong jobs growth was reported by the private-sector ADP Payrolls report.


Official non-farm payrolls data for July are due this coming Friday.


Ten-year US Treasury yields jumped Wednesday to 3-week highs at 2.66% as bond prices fell.


Washington’s creditors have now lost money for three months in succession, lagging world stock markets by well over 5 percentage points according to Bloomberg data.


“The influence real US interest rates have on gold has receded over the last few decades as demand has shifted from West to East,” says a new research paper from market-development organization the World Gold Council today.


The relationship between the gold price and real US interest rates, adjusted for inflation, “is less clear when viewed in the context of other fundamental factors,” the report goes on, pointing to movements in the US Dollar, equities, and gold-price volatility.


Gold in Dollars has rallied nearly 10% in July after losing 25% to hit 3-year lows over the April-June quarter.


Versus Euros and Sterling, gold this month added more than 6%.


Silver meantime failed to break back above $20 per ounce Wednesday morning, holding 5.6% higher for the month of July on the London Fix but then slipping back to $19.44 after the US data.


Over in India, “We hope to contain gold imports at a level well below last year’s total imports,” said finance minister P.Chidambaram on Wednesday.


Imposing yet more new restrictions on gold importers in July – and already doubling Indian premiums over world benchmark gold prices – “[That will] save considerable amount of foreign exchange,” says Chidambaram, “which will have a positive impact on the current account deficit.”


Investment bank and bullion dealer Standard Bank of South Africa was meantime reported by a source to be close to selling its London commodity trading business to China’s giant ICBC bank.


Standard’s largest shareholder, ICBC was recently ousted by the US Wells Fargo as the world’s largest bank by stock-market value.


“Institutional investors in the Western Hemisphere [have] revealed strong negative feelings towards gold,” says a note from London market maker UBS.


“In contrast, retail investors in Asia – who account for the bulk of physical buying – have found good value in this year’s lower gold prices.”


US hedge-fund manageer David Einhorn was quoted Tuesday telling clients that his bullish view on gold “has not changed” and that Greenlight Capital continues to split its exposure equally between physical gold bullion and mining stocks.


Adrian Ash



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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.


(c) BullionVault 2013


Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.





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  • come-and-take-it

    Who wrote this drivel? Must we be lumbered with this tripe at the end of every quarter? By the end of next quarter these figures will have been revised in the negative direction and will no longer reflect anything resembling growth or low inflation. This author is a waste of space.

    • farang

      God knows who writes this gibberish, come-and-take-it.

      If the economy was surging, then they need to explain how, where and when. Artificially stimulating the NYSE, pumping 8.5% of a trillion dollars a month to keep government solvent enough to make payments IS the DEFINITION of INFLATION: they are inflating the money supply. Then to state, as this article does, that “inflation in consumer goods and services ‘fell’ to 0%” is a devious, intentionally misleading crook of shit. Gold and silver rose in price this month, after the blatant naked shorting committed by the FED and it’s banks to artificially drive it’s MARKET-BASED value down.

      Bottom line dear readers: if the economy *really does* start to improve, then the FED would cut the QE, the bankers would quit betting with that money and the NYSE would collapse from LACK of consumer demand and low export demand, and way too high PE.

      They have 10,000 of us baby Boomers retiring every month, and they have not paid back the FICA they stole from the Trust Fund. But have enough to build a White Elephant, billions-wasted DHS HQ, totally unneeded and unwanted by the vast majority of thinking Americans.

      They mislead with terms like “Austerity”, that it is “costing jobs and services”, yet the military budget actually increased by $8 billion. Liars. Cheats. Frauds. That is the face the US presents to the world now.

      A “Justice” department that has to promise former commies they won’t torture or kill an American that has done nothing wrong, if returned to them. Would YOU trust US?

      It is all going to collapse: the US cannot maintain 1000 military bases world-wide while striving to ship all good paying middle-class jobs overseas and cut corpoarte taxes *further* : who will fund the military budget????

      And anyone with eyes can see what this excessive, insane printing of the US Reserve Note is doing to it’s status as the Reserve currency: China is sucking up all the gold, soon they will be dictating the GOLDEN RULE economically, world-wide:

      He who has the gold makes the rules.

      Sooner than they know…D.C. will be under siege. How that plays out, peacefully or otherwise, I cannot say. I do not know. I do know that what cannot be sustained, will not be sustained. The CIA manipulates the vote: that is why you see such smug assholes in D.C.: they know if they vote as told, they will be re-elected and rewarded with cushy “consultant” positions after retiring. You think those 215 congresscritters that voted to continue to fund the ILLEGAL, IMMORAL spying on US, don’t feel safe that they will be re-elected and covered by the msm allies of these scum bags? Think again.

      Coming to a head soon….be prepared. How do you wish to live in a post-constitutional police state? Make your plans for that scenario….deal with it as necessary as a good American. A FREE American.

  • Mr. Jonzz

    Inflation fell to 0.0%. I stopped reading at this assuming the rest of the article was just more lies, BS and nonsense.