Dealing Desk: The safehaven shimmer returns to gold

May 14, 2015·Roland Khounlivong

It has been a very interesting week for gold's fortunes with mixed news coming from the USA, and even mainstream analysts beginning to get nervous about where the world's economy is heading.

Head of Dealing and Settlements, Roland Khounlivong, said, 'It has resulted in a return to gold's safe haven appeal with bargain hunters heading back into the market to protect their wealth.'

Customer activity
In terms of GoldMoney customers, Roland says it has been a week of stability, 'We've seen a low turnover with our customers looking to be holding on to their metal rather than seeing a big profit-taking sell-off. What movement there has been is the usual west to east flow, with some metals moving out of the UK to Singapore, in particular.

This week's pressure points
'The return to favour for gold has come on the back of the mixed news from the USA', says Roland, 'US employment has stabilized, but there's been a downwards revision of non farm payroll. The Popular Bank of China's move to cut interest rates has also sent a further message about the state of China's economy and yesterday's US retail sales figures show consumers are holding back, with numbers down on expectations.

'To cap it all Stephen King, Chief Economist at HSBC, has been reported as likening the world economy to the Titanic. He has warned of several factors which can bring on another recession which will be worse than the last.

'All of this news has put pressure on the US dollar, which is now at levels not seen since February, and with crude staying above $60 a barrel, we've seen a sell off in the bond markets as government bonds experience a sharp increase in yields. It's not surprising that investors are looking around for a safe home in a diversified portfolio.

'Gold is now trading above its $1200/oz support level and the gold to silver ratio is high, standing at 70.26, showing the more industrial metal, silver, as being relatively cheap. Platinum, another precious metal that has industrial demand, has been at levels under the gold price for some time, proving again that the yellow metal's safe haven appeal is winning the day.'

Where next?
'The Federal Open Market Committee minutes are due out on Wednesday, as too are the European Central Bank's the following day, amid the continuing fears over Greece's economy. It will also be tomorrow's US industrial production figures, and next week's US Home starts and existing home sales, that will give further indications where the US economy is heading, and just how the central banks are going to deal with it.'

Week on week price performances
14/05/15 16:00. Gold up 3.3% to $1,221.13, Silver up 6.6% to $17.38, Platinum up 2.6% to $1,157.30 and Palladium down 1.1% at $777.00.


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