This morning the price of Gold is holding above $1,300/oz as both tensions in Ukraine and softer equities provide support to the yellow metal.
EU nations appear to be getting closer to imposing sanctions against Russian powers. However, this has been the topic de jour for many weeks now and we expect to see a lot of up and down movement as the gold price struggles to find direction amongst all the war-talk.
As we saw earlier in the year, the gains made on the back of geopolitical tensions have been short-lived, as we explained in an earlier article. Traders have also warned about this and have pointed to gold ETF outflows only pausing, rather than reversing; the SPDR Gold Trust has not seen any outflows since April 22nd.
Bullish bets
Reuters reports that bullish bets in gold and silver futures were raised (the first increase in five weeks) by hedge funds and money managers, according to data released on Friday by the CFTC. The increase in net-long positions broke a four-week ‘retreat’, the longest this year.
This week is a big data week which will no doubt affect market speculators. On Wednesday the Fed’s policy statement will be released and on Friday there will be April’s non-farm payrolls data. Both (speculators believe) will give insight as to the outlook of the central bank’s stimulus measures.
Growing premiums in India
Short supplies in India continue to put pressure on local gold prices. Premiums have now jumped to a two-and-a-half month high. Demand is especially high this week as gold jewellers are preparing for a surge in gold investment demand ahead of festival season.
India’s gold imports for April are not expected to have exceeded 30 tons, last year April’s imports were 118 tons, following the fall in the gold price.
PGM producers going to workers
Platinum and Palladium also made gains as violence escalated in the strike-hit South African mines. The producers are now hoping to bring the 13-week strike to an end by taking their latest wage offer directly to the workers, rather than via the unions.