GOLD PRICES held in a tight $5 range in quiet Asian and London trade Monday morning, failing again to hold a rise above $1200 per ounce as European stock markets gained.
Trading volumes in major gold and silver ETFs were also low as broad commodity indices slipped 0.5%.
Silver tracked the gold price, struggling to hold above $16 per ounce as crude oil's cut last week's rally but the Russian Ruble extended last week's sharp rebound from sudden new all-time lows on the FX market.
Beijing officials offered to expand China's currency lines with Moscow over the weekend to help ease Russia's FX crisis.
Trading volumes in China's most active gold contract were muted on Monday, with Yuan prices ending the day unchanged from last week's finish.
"Volume [overnight in Asia] was very lean indeed," says Swiss refining and finance group MKS's traders in a note.
Despite the Shanghai Gold Exchange seeing "a premium [above London quotes] of $5 shortly after the open," it adds – "
something not seen in months – this did not last long however, moving back towards a premium of $2 over spot fairly quickly."
Western investment funds last week cut their demand for gold exposure, notes South African investment and bullion bank Standard Bank, saying that "in spite of the recent market panic surrounding Europe and now Russia, ETF liquidation continues."
The giant SPDR Gold Trust (NYSEArca:GLD) – the world's most valuable exchange-traded trust fund product at its 2011-2012 peaks – last week shrank by 1 tonne of gold as investors sold, cutting the amount of metal needed to back its shares to 724 tonnes.
Down almost 50% from GLD's end-2012 peak, those holdings hit 6-year lows at 717 tonnes at the start of this month.
The largest silver ETF – the iShares Silver Trust (NYSEArca:SLV) – meantime dropped another 131 tonnes last week to reach 10,517 tonnes, down 3.5% from October's 3-year peak.
"Holdings of gold in physically-backed ETPs," says French bank Natixis' commodity team. "are expected to remain a source of supply in 2015.
"We would not be surprised to see a slight acceleration in [trust fund] outflows as interest rates rise," says Natixis, forecasting that gold's 2015 low will come around $1110 when the US Fed make its first interest-rate hike, expected in the second quarter.
But on the contrary, says analyst David Jollie at Japanese trading house Mitsui, "Net selling does not currently pose anything like the bearish threat to the gold price that it did at the start of 2013.
"This source of selling [has] come to a halt. If prices rise, we would now expect the impact to be a net inflow of metal into the various funds."
Net speculative betting on Comex silver futures and options, in contrast, fell from a 4-month high to ease below $2 billion by value.
