- Today’s AM fix was USD 1,284.50, EUR 959.16 and GBP 762.99 per ounce.
- Yesterday’s AM fix was USD 1,295.00, EUR 966.92 and GBP 767.36 per ounce.
Gold fell $14.60 or 1.13% yesterday to $1,282.10/oz and silver slipped $0.25 or 1.21% to $20.37/oz.
Palladium was the only one of the major precious metals to rise in July, climbing 3.2% for its sixth month of gains. Platinum was down 1.8%, silver down 3% and gold down 3.4%.
Silver for immediate delivery was little-changed in London at $20.40 an ounce. Platinum fell marginally and was at $1,463/oz. Palladium was marginally lower at $871/oz and remains near the 13 year nominal high of $889.75/oz.
Gold In U.S. Dollars - 10 Years
Gold is marginally higher in London this morning and overnight in Singapore, gold remained in a tight range between $1,280/oz and $1,285/oz. With Asian trade limited to a narrow band of just $5.00, volumes traded in late trade on Globex were low at just 9,000 lots (GCZ4).
Futures trading volume in London declined and was 31% below the average of the last 100 days. Traders are waiting for the non-farm payrolls data later today.
Markets are jittery and global stock markets are seeing losses with all U.S. indices down yesterday and Asian and European indices down today. Economic and trade war with Russia, conflict in the Middle East and the risk of contagion in Portugal and from Argentina’s default are weighing.
Institutional money is being allocated to gold again as seen in the ETF numbers. Gold ETFs saw their largest monthly inflow in July since December 2012, according to Reuters data, having added 7.4 tonnes to their holdings. Gold ETP holdings hit a four-year low in mid June at 1,491 tonnes, but have since seen some inflows.
Premiums for gold bars in India remain near recent lows due to weak domestic demand. The premium on Wednesday fell to $5-$6 per troy ounce compared with $10 per troy ounce during the last week.
Gold prices have been in lockdown in a range-bound month. The spread between July's high and low was just $57.54. This is the narrowest in seven years - the June 2007 range was $54.70. This was right before the global financial crisis.
In 2007, gold began to move up aggressively in September (see chart above). On September 1, it was trading at $672/oz. By early March 2008, it was over $1,000/oz - for a gain of nearly 50% of just 7 months.
Were gold to replicate the gains seen in that period in the coming months, gold would trade over $1,900 and close to new record nominal highs by the 2nd quarter of 2015. The real record high, adjusted for inflation, is of course $2,400/oz. We continue to believe it will be reached before 2020.
The summer months frequently see seasonal weakness as has been the case in recent years and since gold became a traded market in 1971. Gold and silver often see periods of weakness in the summer doldrum months of May, June and July.
Gold’s traditional period of strength is from early August into the autumn and early winter. Thus, early August is generally a good time to buy after the seasonal dip.
Today, we commence August trading and August along with September and November, are some of the best months to own gold. This is seen in the charts showing gold’s monthly performance over different time frames - 1975 to 2011, 2000 to 2011 and the Bloomberg Gold Seasonality table above from 2003 to 2013.
Late summer, autumn and early New Year are the seasonally strong periods for the gold market due to robust physical demand internationally. This is the case especially in Asia for weddings and festivals and into year end and for Chinese New Year when voracious China stocks up on gold.
Gold’s weakest months since 1975 have been June and July (see tables). Buying gold in early August has been a good trade for most of the last 34 years and especially in the last nine years, averaging a gain of nearly 13% in just six months after the summer low.
Thackray's 2011 Investor's Guide notes that the optimal period to own gold bullion is from July 12 to October 9. In the previous 25 years, gold bullion has outperformed the S&P 500 Index by 4.7%.
The data is compelling but it is important to realize that the seasonal data is just another indicator. Gold’s recent weakness could continue in the coming months. Therefore, short term speculation should be avoided in favor of long term investment diversification.
Investors should, as ever, avoid attempting to time the market and consider cost averaging their purchases. This way they protect themselves from market falls and also from buying again at much higher prices.
Absolutely nothing has changed regarding the fundamentals driving the gold market. We are confident that gold, and particularly silver, are still in long term secular bull markets likely for a 15 to 20 year duration.
Owning physical coins and or bars in your possession and owning physical gold and silver in allocated and most importantly in segregated accounts will continue to protect and grow wealth in the coming years.