Metals market update for April 29

April 29, 2015 11:19 AM

Today’s AM LBMA Gold Price was $1,204.80, €1,095.45 and £783.99 per ounce.
Yesterday’s AM LBMA Gold Price was $1,201.40, €1,100.56 and £788.17 per ounce.

Gold climbed 0.82% or $9.80 and closed at $1,212.20 an ounce yesterday, while silver rose 1.4% or $0.23 closing at $16.61 an ounce.

In Asia overnight, Singapore gold prices ticker marginally lower and hovered at $1,209 an ounce near the end of day trading after gaining almost 3% the two previous trading sessions. Gold eked out small gains this morning to trade to its highest price in three weeks as a weak U.S. data and a weak dollar have lowered expectations for a U.S. interest rate hike in June.

Today’s focus will primarily be on the U.S. Federal Open Market Committee statement at 1900 GMT and the U.S. GDP data out earlier at 1330 GMT.

Most analysts are expecting a dovish statement from the Fed especially if the GDP data published today is weak. A softer dollar will should  help the yellow metal’s safe haven appeal and boost prices.

China’s gold bullion imports from Hong Kong fell this March to its lowest level in seven months. Q1 saw a 9% fall in Chinese physical gold buying cited an industry report. Although demand as seen on the Shanghai Gold Exchange withdrawals remains near record highs.

Iran and the U.S. Navy appear poised for a battle that could degenerate into another theatre of war in the Middle East.

Yesterday, a cargo ship was shot at, boarded and confiscated by Iranian naval forces and taken to the Persian Gulf port of Bandar Abbas, on the Strait of Hormuz. 34 sailors on board the vessel are American, although U.S. officials later said that the ship, bearing the flag of the Marshall Islands, has no American sailors on board.

Iran’s FARS news agency said the vessel had been detained “for trespassing in Iran’s territorial waters.” The Pentagon said the action was “provocative.”

Some 17 million barrels per day – about 30% of all seaborne-traded oil – passed through the Straits of Hormuz in 2013, according to the US Energy Information Administration.

Just last week, the president directed the USS Theodore Roosevelt to the Gulf of Aden to “ensure the freedom of navigation” through its strait, US officials said, as Iranian ships approached Yemen’s shores.

Geopolitical risk remains underestimated by markets. There are a number of geopolitical Black Swans out there – from the Ukraine to the Middle East which could flare up and be the catalyst for the next stage of gold’s bull market.

Gold in late morning trading in London is down 0.53% at $1,205.28 an ounce. Silver is off 0.83% at $16.46 an ounce while platinum has dipped 0.32% at $1,151.49 an ounce.

About the Author

Mark O'Byrne is executive director of Ireland-based GoldCore.