Gold Price Trims Post-Fed Gains, Last London Fix at 1-Month Sterling High, 'Sell Rallies' Say Dealers

GOLD PRICE gains of $30 per ounce were trimmed in London trade Thursday, edging some 1.0% below the earlier 8-session high reached in spot dealing after the US Fed's surprisingly 'dovish' March policy statement yesterday.

Eurozone stock markets ended the day flat, and US equities halved Wednesday's 1.2% gains, as US Treasury bond prices fell back, pushing 10-year yields up to 1.96% from yesterday's 6-week low.

Crude oil dropped more than 3%, while the last-ever London Gold Fix – a dealing point and benchmark developed informally over a century ago – came in at $1166 per ounce as the Dollar recovered some of its losses on the FX market.

That helped spot gold prices in Euro terms peep above €1100 per ounce for the first time since Monday.

UK investors saw the PM Gold Fix, quoted in Sterling from its formal launch in 1919 until superseded by the Dollar in April 1968, end at a 1-month high of £789 as the Pound gave back most of last night's rally from new 5-year lows to the Dollar.

"Physical interest still there," says Standard Bank's London dealing team, but "ETFs continue daily liquidation."

Trading volume in Shanghai's main domestic gold contract rose to a 1-week high, and premiums to equivalent London spot quotes rose to $5.65 per ounce as the Yuan rose sharply against the Dollar.

Following Wednesday's much more 'dovish' than expected Fed policy statement and forecasts, the giant SPDR Gold Trust (NYSEArca:GLD) yesterday regained 1.8 of the 2.6 tonnes it lost Tuesday, ending with 749 tonnes of gold to back its shares.

But overall, such trust-fund investment products have now shed some 0.3% on Standard Bank's math from the multi-month peak of late February.

"Given grand scheme, not much has really changed," says one London dealing desk. "Would look to sell rallies."

"As this digestion [of the Fed's changed forecasts] takes place," agrees David Govett at London brokerage Marex Spectron, "I would look to sell rallies from here for the longer term."

London's bullion market – heart of the world's wholesale trade – will tomorrow see a new replacement for the Gold Fix. Run by price-discovery specialists ICE Benchmark Administration, the new LBMA Gold Price will launch with 6 participating banks at 10.30am – the current four Fixing members, plus Switzerland's UBS and one other as yet un-named.

The LBMA Gold Price will from April 1st become a regulated benchmark under UK law.

That day may also see world No.1 miner and importing nation China extend import licenses beyond the current 15 banks permitted to bring in gold from abroad, the People's Bank said today, adding refiners, miners and more banks.