Weekly markets round-up for StoneX Bullion

Welcome to a very brief overview of the recent performance in the markets. The essentials are captured in the table below and each week we will show a chart of interest.

Gold slipped just below the lower boundary of its 2020 uptrend last Thursday and has yet to regain the band. Essentially the price has been moving sideways since the middle of August, in a range between $1,900 and $2,000. The physical markets are still quiet in most of the Middle East and Asia, with India moving into a relatively steep discount to the international market (with silver in a discount also). China was in quite a steep discount, but has now moved back closer to parity, which means that the arbitrage trading between Shanghai and London has now dried up. Three are still some signs of resale in parts of the Far east, generally in the form of jewellery.

In an encouraging background development, the Indian Government has announced the implementation of regulations for the domestic market, this is part of a long-term plan to streamline the industry, which is a very large and widely dispersed one, and will be welcomed. Typically the purity of gold traded in India is 995 (99.5% purity), whereas the further east we go, the higher the purity of the jewellery, reaching up to four nines (99.99%) in China and Hong Kong (although there is also now a substantial amount of carat jewellery sold in China).

The slippage in the equities markets towards the end of last week would probably have influenced gold’s dip towards the end of the week, although it has stabilised this morning after further selling in Asia overnight, along with Asian equities. It does start to look as if, especially with the U.S. election on the horizon, investors are finally waking up to the fact that market capitalisations are extremely rich, especially in the high-tech sectors; some profit taking and latterly technically-driven selling thus invaded the markets towards the end of last week ahead of the Labor Day holiday today 7th September. The European markets are more stable this morning, and all eyes now turn to the European Central Bank, which meets on Thursday; the markets are expecting a clear policy statement and it is entirely possible that the ECB will chime in with the Fed and allow the scope for the return of some inflation (provided, of course, the economic activity picks up in order to drive such a development).

Two key investors, Jeffrey Gundlach and Ray Dalio, of DoubleLine Capital and Bridgewater Associates respectively, are speaking publicly this week. Mr. Gundlach hailed gold as a key investment earlier this year and Bridgewater, at the end of the second quarter of the year, held 30% of its portfolio in gold ETFs and a further 15% in Gold share ETFs.

The overall holdings in gold ETFs have continued to rise, now standing at approximately 3,835t worth $238Bn and equivalent to roughly 59 weeks’ gold mine supply.