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Gold Price: ETF Investors Start 2017 With Massive Offload


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Gold made the most of the first full trading day of the year, jumping to a three-week high, but investors in gold exchange traded funds continued to dump the metal in huge numbers.

Gold for delivery in February, the most active contract on the Comex market in New York, hit a high of $1,166 an ounce in late morning trade, before paring some of those gains to settle at the highest level since December 14.

Gold is up nearly $40 an ounce since hitting post-election lows of $1,124 mid-December, but remains down nearly $180 from an initial but brief surge on election night.

Since the election investors in top physical gold-backed exchange traded fund – SPDR Gold Shares (NYSEARCA: GLD) – have dumped a net 135.8 tonnes. Since November 9, GLD has not enjoyed a single day of net purchases – on Tuesday, investors pulled out another 8.3 tonnes of the yellow metal.

GLD dwarfs other physically-backed gold ETFs holding more than 45% of the global total. GLD vaults now hold 813.5 tonnes or 26.2 million ounces; worth just over $30.1 billion. That’s down more than $13 billion from the 2016 peak hit early July as the gold price retreats and investors liquidate their holdings.

Massive 3,000-year-old Celtic gold belt found in British farmer’s field

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A huge 3,000-year-old Celtic golden belt, so large that it’s believed to have been worn by a pregnant woman or a prized animal in the course of a sacrifice, has been unearthed in a Cambridgeshire field, in Eastern England.

According to the British Museum, the torc is one of the largest and most spectacular ever discovered in England, and it is one of thousands of archaeological finds made by members of the public last year.

The thick twisted band, found by an anonymous treasure hunter walking with his metal detector, is made from 730 grams of high-grade gold.

While torcs are usually described as collars, longer ones are believed to have been worn as belts. For the Iron Age Celts, the gold torc seems to have been a key object, identifying the wearer as a person of high rank, and many of the finest works of ancient Celtic art are, in fact, torcs.


Zinc shoots to 8-year high on expected metal deficit

Mine closures pushing up the price

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The last time the benchmark zinc price was this high, Americans were in the throws of an election that saw Barack Obama defeat George W. Bush.

Worries about mine closures have sent the metal used for galvanizing steel on a wild ride; the benchmark zinc price rose 2.1% today to $2,725 a tonne, which is the highest it’s been since March of 2008. The 30-day spot zinc price was at $1.20 a pound, 11.2% higher than it was a month ago. Chinese funds in particular are piling into zinc.


Apart from steelmaking raw materials iron ore and coking coal, zinc is the best performing mined commodity in 2016; the benchmark price has nearly doubled (up 90%) since it fell to a 6.5-year low in January of $1,444.40 a tonne.

What’s driving the surge? Mine closures. Last year two major mines closed – Australia’s Century and the Lisheen mine in Ireland. The two mines had a combined output of more than 630,000 tonnes. The shuttering of top zinc producer Glencore’s (LON:GLEN) depleted Brunswick and Perseverance mines in Canada in 2012 brings total tonnes going offline since 2013 to more than a million tonnes.

At the end of October Glencore added another lead and zinc mine to the list, its Black Star open-pit mine at Mount Isa in Queensland, Australia.

Reuters survey predicts the zinc market will be in deficit this year by 400,000 tonnes, which portends more good news for the price. Although, dark clouds could be swirling for zinc bulls in the form of zinc inventories built up in London Metal Exchange (LME) warehouses. Reuters notes that Macquarie, an Australian investment bank, estimates 1.4 million tonnes of zinc could trickle into the market, thus offsetting the expected supply deficit.

Shanghai Metals Market (SMM), a Chinese market intelligence site, is sanguine on the zinc price for the medium term, predicting that zinc smelters may have to suspend production in the first quarter of 2017 due to falling material inventories.

This may help LME zinc breach $3,000 per tonne, $3,500 per tonne, or even higher. Nonetheless, there are still some uncertainties from macroeconomic front, such as liquidity, investment, US dollar and Chinese yuan’s trend, according to SMM.


Gold Price Is Tumbling, Iron Ore Price Leaps, Warnings As Copper Price Surge Continues

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Gold dropped to a five-month low Friday as the post-election price surge collapsed and investors redirect funds into industrial commodities and the stock market.

Gold for delivery in December dropped to a session low of $1,223.40 an ounce in morning trading on the Comex market in New York, down over $40 an ounce or 3% from Thursday’s close.

The metal touched a high of $1,338 late on Tuesday, but the rally in record volumes for the Comex market, soon evaporated.

The Financial Times reports a number of prominent hedge fund managers and billionaires running family offices have moved aggressively out of gold and into stocks following the election.

The gold price has an inverse correlation to interest rates as the metal is not income producing and investors have to rely on price appreciation for returns. Higher interest rates also boosts the dollar which usually move in the opposite direction of the gold price.

Gold stayed on the defensive, beset by enhanced growth expectations as… investors took on the view that the pro-growth policies of a new administration were good for paper assets


Gold’s performance is in stark contrast to predictions ahead of the election with many analysts seeing gold reaching $1,500 or beyond, citing increased safe haven buying as a major reason behind an upswing.

The rise in bond yields is not good for gold unless accompanied by a similar rise in inflation. The chart below shows that the move so far in 10-year bond yields has seen the real yield rise to 0.25% – the highest level since June.

Low real yields have provided a major source of support for gold this year, but depending on inflation expectations, this source of support has at least for now been sharply reduced.

Rising US bond yields and the brewing emerging markets crisis has seen strong demand for dollars post the election, and this marks yet another gold-negative development.


Rising US bond yields and the brewing emerging markets crisis has seen strong demand for dollars post the election, and this marks yet another gold-negative development

The import price of 62% Fe content ore at the port of Tianjin surged 7.4% to $79.70 per dry metric tonne on Thursday as the US presidential election added fuel to the fire of iron ore’s almost a month of unbroken gains.


According to The Steel Index an unnamed Australian miner sold 62% Fe Newman fines on the globalORE platform for $80.65.

Lower grade fines at the port of Qingdao shot up a whopping 12.4% on Friday to trade at $68.20 a tonne. 58% Fe content iron ore has risen 36% over the last four weeks while 65% Fe at the same Chinese port jumped to $91.70 a tonne.

On the Dalian Commodities Exchange in China iron ore futures again reached it’s daily price change limit of 6% to trade at over $90 a tonne.


While gold’s initial rally following the US presidential election has evaporated, the rally in industrial metals continued on Friday with the copper price jumping to a 17-month high.


In pre-regular hours trade on Friday copper for delivery in December gained 4% from Thursday’s close trading as high as $2.6525 per pound ($5,847 a tonne) in New York, the highest since mid-June 2015.

Copper has risen during 14 of the last 15 trading sessions, adding 27% in the process. After underperforming other metals and steelmaking raw materials in 2016, copper is now firmly in bull market territory with a 24.5% rise year-to-date.

The current upturn in the copper price is vulnerable to a correction in investor sentiment or profit-taking

In a research note Capital Economics cautions copper bulls that despite encouraging signs of falling warehouse stocks and the effect of recent production outages, the current upturn in the copper price is vulnerable to a correction in investor sentiment or profit-taking.