WHOLESALE PRICES for gold
investment bars struggled just above $1600 per ounce in London on Thursday,
after dipping below that level for the first time in a week as the US Federal
Reserve left monetary policy unchanged yesterday.
"Immediate QE is off the table," Reuters quotes Frank McGhee, chief
precious metals trader at Chicago's Integrated Brokerage Services.
"I will probably not be surprised to see them not do anything in
The Bank of England today followed the US Fed in leaving UK policy unchanged
in its midday announcement. The European Central Bank was also expected to
make no change to its record-low rates of 0.75% per year.
Stock markets meantime ticked higher, while crude oil held onto a sharp rally
but major-government bond prices also rose.
prices ticked around $27.50 per ounce after hitting their own 1-week low
versus the Dollar.
"Increased or decreased prospects of [central-bank] intervention seem to
be the rationale for any move in precious metals at the moment," says a
London analyst in a note.
Ahead of Wednesday's Fed decision, "Gold's $50 gain since Mario Draghi's pledge to 'do whatever it takes' last week
suggested high expectations were priced in," he adds.
Italy's prime minister Mario Monti yesterday told
reporters that a banking license for the European Stability Mechanism
"will in due course occur" – meaning that the €500
billion ($615bn) bail-out fund could buy government debt using money borrowed
from the European Central Bank.
But "a banking license for the ESM rescue fund is absolutely not our
way," said German spokesman Georg Streiter
after a cabinet meeting in Berlin.
German Bundesbank chief Jens Weidmann
– a member of the ECB meeting together with the 16 other national
Eurozone central bank heads today – is also against such a move.
"If the ECB doesn't do something today, there will be
disappointment," reckons Japanese conglomerate Mitsubishi's precious
metals analyst Matthew Turner, speaking to CNBC.
"But they will have to do something at some point. The situation...will
force them," says Turner, pointing to support for gold investment prices
at the June and July lows around $1550 per ounce.
Back in Washington, and where the Federal Reserve's June statement said
"The Committee is prepared to take further action as appropriate,"
this week's press release said it will "will
provide additional accommodation as needed."
The Dollar rose fast on the "no change" decision against the
European single currency, but gave back most of its gains by Thursday
lunchtime in London to trade at $1.228 per Euro.
"Gold prices have dropped in the aftermath of every [Fed] meeting this
year with the exception of January," said a note from bullion-bank and
London market-maker HSBC's precious metals team last night.
Just as on Wednesday this week, "The bulk of losses then were pared or
reversed in late session trading the same day."
Over in Asia, the Bank of Korea said today its gold investment increased by
16 tonnes in July, the third such rise in a year. That took gold holdings at
the world's 7th largest central bank to 70.4 tonnes, equal to 0.9% of its
total reserves – up from 0.1% only five years ago.
Central banks globally hold an average 1.4% of their reserves in gold
investment bars, according to data from market-development organization the
World Gold Council.