Gold trading among existing private investors rebounded as bullion prices steadied in November, but new interest from first-time buyers sank to its lowest since the metal’s bear-market price lows of 2015.
That pulled the Gold Investor Index lower to 53.9 from October’s reading of 54.6 according to new data today from BullionVault, the world’s largest online marketplace for physical precious metals.
Internet searches for ‘buy Bitcoin’ meanwhile further overtook the phrase ‘buy gold’ last month as the crypto-currency jumped to new all-time historic highs above $11,000.
Gold trading on BullionVault rose 30.5% by volume last month from October. Across November as a whole, clients of the West London-based fintech specialists added 100 kilograms of gold to their holdings overall.
That took total client gold holdings back above 38.0 tonnes, within 0.2% of July’s all-time peak.
But the number of new first-time investors fell again, recording its lowest monthly level on BullionVault since December 2015, when gold, silver and platinum prices hit five, six and seven-year lows respectively before turning sharply higher.
Over the last 12 months, the number of first-time precious metal investors has now fallen by 20.1% compared to the previous half-decade. Only Germany is ahead of its 5-year average among BullionVault’s top 10 markets, with the number of new users from the Eurozone’s largest economy rising 10.5% in the 12 months to November 2017.
Adrian Ash, director of research at BullionVault, said:
“Whether or not Bitcoin ever achieves common use as money, the crypto-currency plainly offers investors a hot speculation and not a safe haven right now. Bitcoin’s fresh record highs have come alongside new historic highs in the stock market, led by stretched valuations in tech shares. The ultimate investment insurance of physical gold in contrast is trading flat in line with its 5-year average.
“Only German investors have so far used this opportunity to start building their gold holdings, but a sharp New Year’s correction in 2017’s hottest assets will surely see investors elsewhere rush to follow Germany’s lead, albeit at higher prices. The best time to buy insurance remains when it isn’t urgent.”
Worldwide, the number of BullionVault users starting or growing their gold holdings in November was little changed from the month before, down 2.6% from October.
The number of sellers in contrast rose 22.5% from October’s 23-month low as prices edged higher on a month-average basis against all major currencies.
That saw the Gold Investor Index retreat to 53.6 from October’s 54.6 reading – then a 3-month high – to mark the 10th month of 11 so far in 2017 that BullionVault’s sentiment measure has moved inversely to prices.
Tracking only genuine buying and selling among private investors, the Gold Investor Index hit a record 71.7 in September 2011, peaking with the gold price. It would read 50.0 if the number of buyers exactly balanced the number of sellers across the month.
The number of silver buyers meantime rose 8.8% last month from October’s 29-month low as prices edged higher. The number of sellers jumped 26.9%.
That pushed the Silver Investor Index down to 51.0 from October’s 51.6 reading, marking the 9th time in the first 11 months of 2017 that this sentiment measure moved in the opposite direction to silver prices.
By weight, total client silver holdings stayed unchanged for a third month running, holding at a record 689 tonnes.
Asian shares jump after Powell nixes rate hike fears
By Hideyuki Sano and Echo Wang
TOKYO/MIAMI (Reuters) – Asian stocks jumped on Thursday after U.S. Federal Reserve Chair Jerome Powell reaffirmed interest rates would stay low for a long time, calming market fears that higher inflation might prompt the central bank to tighten the monetary spigot.
Powell’s reassurance gave a fresh impetus to reflation trades and boosted risk asset prices while also driving U.S. bond yields back up to one-year highs.
MSCI’s ex-Japan Asia-Pacific shares index rose 1.0% while Japan’s Nikkei gained 1.6%.
Hong Kong’s Hang Seng jumped 1.8% to pare more than half of its previous day’s losses following the announcement of a stamp duty hike.
In a second day of testimony in Washington, Powell reiterated the Fed’s promise to get the U.S. economy back to full employment and to not worry about inflation unless prices rose in a persistent and troubling way.
“Powell said it will take three years for them to achieve its inflation target, essentially reaffirming the Fed will not raise interest rates until 2023,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
“A huge amount of cash investors have to work is flowing into the stock market, and that is more than offsetting any negative aspects of higher bond yields.”
The prospects of a prolonged period of low interest rates came as investors expect a huge U.S. fiscal stimulus and a progress in COVID-19 vaccinations to shore up the economy, especially the sectors hit the hardest by the pandemic.
The U.S. Food and Drug Administration said on Wednesday Johnson & Johnson’s one-dose COVID-19 vaccine appeared safe and effective in trials, paving the way for its approval for emergency use as soon as this week.
Johnson & Johnson rose 1.3% following the news.
On Wall Street, the Dow Jones average jumped 1.35% to a record high, outperforming 1.0% gains in tech-heavy Nasdaq, as investors rotated into cyclical shares out of flying-tech firms.
In a possible sign of a fresh frenzy into old economy shares, GameStop rose 83.3% in extended trade, building on a gain of 103.9% on Wednesday.
U.S. bond prices stayed under pressure, boosting their yields to the highest level in a year.
The 10-year U.S. Treasuries yield rose to 1.412%, having hit a high of 1.435% on Wednesday.
“I wouldn’t say there is a panic in the bond market. But we have a coronavirus package worthy of $1.5, $1.7 or $1.9 trillion. And in addition, there will be infrastructure spending as well. Investors see few reasons to buy bonds aggressively now,” said Takafumi Yamawaki, head of Japan rates research at J.P.Morgan.
A closely watched part of the U.S. yield curve measuring the gap between yields on two- and 10-year Treasury notes rose to 127.4 basis points, near its 2016 peak of 135.7 hit after Donald Trump’s surprise election victory.
In the currency market, the safe-haven U.S. dollar languished near three-year lows versus riskier currencies as continued dovish signals from the Fed stoked reflation bets.
The Australian dollar hit a three-year high of $0.7978, while the safe-have yen eased 0.2% to 106.04 per dollar. The euro stood little changed at $1.2159.
Elsewhere, copper price jumped 3% to its highest level in almost a decade.
Crude oil climbed to fresh 13-month highs after U.S. government data showed a drop in crude output as a deep freeze disrupted production last week.
U.S. crude rose 0.25% to $63.40 per barrel and Brent was at $67.33, up 0.43% on the day.
(Reporting by Echo Wang in Miami; Editing by Sam Holmes)
Dollar struggles as Powell stays dovish course; pound, loonie soar
By Kate Duguid
NEW YORK (Reuters) – The dollar struggled on Wednesday morning as dovish testimony from Fed Chair Jerome Powell bolstered concerns about rising inflation, hitting multi-year lows against the pound and commodity-linked currencies including the Canadian, Australian and New Zealand dollars.
The Federal Reserve’s Powell reiterated on Wednesday that U.S. interest rates will remain low and the Fed will keep buying bonds to support the U.S. economy. The Fed’s commitment to low rates has some investors worried that inflation could spike on passage of further fiscal stimulus.[nS0N2JQ00R]
Powell’s remarks to the House Committee on Financial Services mirrored his testimony before the Senate on Tuesday.
The chances for higher growth – aided by easy financial conditions and the promise of fiscal stimulus – has sent money towards currencies expected to benefit from a pick-up in global trade, like those linked to commodities, and to countries like Britain that are recovering from the coronavirus pandemic.
Because commodities rise with inflation, commodity-linked currencies including the Canadian, Australian and New Zealand dollars have also benefited from the rise in inflation fears.
“The market’s focus is well ahead of where Powell is talking,” said Alan Ruskin, chief international strategist at Deutsche Bank.
While Powell is focused on the current state of the U.S. economy and employment, currency markets are focused more on inflation and reflation, said Ruskin.
“It is critical to make judgements on whether reflation turns into excess reflation which then turns into inflation.”
The dollar’s weakness in recent days has been more remarkable as it comes against the backdrop of a broader rise in U.S. yields. Benchmark 10-year borrowing costs are holding near their highest in nearly a year. [US/]
Against the Canadian dollar, the greenback on Wednesday hit its lowest since 2018 and was last 0.25% lower on the day at 1.256 CAD per dollar. The Australian dollar rose to a three-year high of $0.794 before paring some gains to trade 0.08% stronger at $0.792. The Kiwi rose to its highest since 2018, last up 0.69% on the day to 0.739.
The British pound climbed past $1.42 overnight for the first time since April 2018.
The dollar index against a basket of six major currencies was at 90.378, up 0.29% on the day, but still trading within a narrow range.
YTD FX performance https://fingfx.thomsonreuters.com/gfx/mkt/xklpyojnepg/YTD%20FX%20performance.JPG
(Reporting by Kate Duguid in New York and Saikat Chatterjee in London; Editing by Sonya Hepinstall)
Sterling touches $1.42, hits highest vs euro in a year
By Ritvik Carvalho
LONDON (Reuters) – Sterling hit $1.42 on Wednesday, coming within touching distance of $1.43, while also reaching a year’s high against the euro as analysts retained their bullish views on the currency.
The pound is the best-performing G10 currency this year, up nearly 4% against the dollar and 3.2% against the euro as investors bet Britain’s rapid COVID-19 vaccine rollout will lead to a quicker economic rebound.
Analysts also point to relief over avoiding a “no-deal” Brexit with the European Union at the end of last year as benefiting the pound, with the market looking through short-term headwinds and disruption.
“Though we had anticipated a post-Brexit deal bounce in GBP (0.88 EUR/GBP; $1.35 GBP/USD), our scepticism about the durability of the GBP recovery beyond the initial relief has been misplaced,” said BoFA Global Research’s FX strategists Kamal Sharma and Michalis Rousakis in a note to clients this week.
“Our default position for much of the past five years has been one of healthy scepticism towards Brexit and its implications and whilst the UK’s handling of the pandemic in 2020 was lacking, it is in stark contrast to the highly effective vaccine roll-out in 2021.”
This should position the UK economy for a stronger recovery in the coming quarters … and enough to provide the pound with further support heading into a strong seasonal tailwinds in April, they said.
In Asian trading hours, sterling rose to $1.4295 against the dollar, its highest since April 2020. It climbed to its highest against the euro in a year, touching 85.40 pence.
By 1600 GMT, sterling traded 0.1% lower on the day at $1.41 and 0.1% higher to the euro at 85.96.
“Seemingly GBP is benefiting from a positive vaccine rollout and short-term Brexit adjustment problems disappearing, which also from a relative rates perspective is supporting GBP,” said Lars SparresÃ¸ Merklin, senior analyst at Danske Bank.
“That said, momentum seems stretched and EUR/GBP seems oversold based on our short-term models, and hence we may see short EUR/GBP take a breather from here.”
Also supporting sterling has been a pushing back of market expectations of negative rates by the Bank of England.
Money markets point to UK interest rates remaining above zero at least until August 2022, Refinitiv data shows. They were seen turning negative as early as June 2021 four weeks ago.
(Reporting by Ritvik Carvalho; editing by Larry King)
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