|Geopolitical Tensions Rise In Persian Gulf |
Los Angeles CA, (Tangible Investments) - by James O’Dell - Gold and Silver prices turned lower on Friday with Gold easing $5.80 or 0.48 percent to close at $1,198.80 an ounce, to snap a seven day rally, Gold's longest winning streak since August 2012. Silver dipped $0.17 or 0.99 percent to close at $16.96 an ounce, while the Gold/Silver ratio, the measure of the number of Silver ounces needed to buy an ounce of Gold, rose to 70.68.
The week began with a press release by the London Bullion Market Association (LBMA) chief executive, Ruth Crowell concerning the new Gold price fix mechanism, the LBMA) Gold Price. “I’m delighted that Friday’s launch went smoothly and that now all four precious metals prices have been successfully transitioned to independently administered, electronic auctions.”
The new electronic Gold Price, runs twice daily at 10:30am and 3:00pm London time. “Within the process, aggregated Gold bids and offers are updated in real-time with the imbalance calculated and the price updated every 45 seconds,” the press release explained. Banks participating in the auctions are Barclays Bank, Goldman Sachs International, HSBC Bank USA NA, Societe Generale, The Bank of Nova Scotia - ScotiaMocatta and UBS.
St. Louis Fed President James Bullard warned last week that a “violent” reaction could occur in the markets to the first Fed rate hike and may even hasten the next recession. While the Fed desperately wants to raise rates, Chicago Fed President Charles Evans believes it would be worse if they raised them too soon and had to reverse course later. “[T]he credibility that supported the alternative tools’ prior efficacy could be substantially diminished by an unduly hasty exit from the zero lower bound,” said Evans.
MacNeil Curry, head of global technical analysis at Bank of America Merrill Lynch (BAML) said last week that a "correction" in the greenback over the short term, coupled with falling Treasury yields should usher in a sizable and sustainable rally in Gold. Curry believes the yellow metal should break above $1,300 an ounce by the end of May.
Safe-haven Gold got a boost mid-week from geopolitical tensions in Yemen, after Saudi Arabia, together with a coalition of several Gulf states, launched air strikes against Shiite rebel forces in Yemen’s capital on Thursday. The air assault began in the early morning hours not long after Yemen’s president, Abed Rabbo Mansour Hadi, was forced to flee by boat from the southern port city of Aden, as Houthi militants were closing in.
More than 100 Saudi Arabian jets were used to strike Yemeni targets to stop the Houthi's advance and Saudi news media reports that the first night of air strikes had already fully disabled the Houthi backed air force. “If you start seeing boots on the ground and you start hearing talk of coalitions, that is the time when people start fearing a wider conflict in the Middle East,” said Mark O’Byrne, of Goldcore Ltd., by phone. “That is a classic example of the type of situation in which Gold tends to do well.”
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