Nov 2019


Nov 2019

Weekly markets round-up for StoneX Bullion

By 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.

In recent weeks gold had been trading in an ever-narrower range, thus looking as if it was forming a triangle formation. Normally speaking, when the price breaks out of that formation, technical analysis would suggest that it should move by an amount roughly equal to the base of that triangle. This certainly happened when the triangle was broken in late May, but this time it has not. The price has been testing $1,520 but not broken through and now the chart effectively shows gold trading sideways, with resistance at and above $1,520, good support between $1,496 and $1,505 plus pockets of bargain hunting on any slippage towards $1,480.

In theory this should be good for the fundamental structure of the market as it gives the price-elastic part of retail demand, which is between 80 and 85% of jewellery and investment (excluding ETFs, OTC and official sector). Normally it takes time for these retail purchasers to get used to a new trading range before they come back into the market. This time however, the large change in range, economic uncertainty and the broad belief that there is little further upside scope is keeping these buyers out of the market for much longer than usual and demand in the third quarter overall was down by 25% according to new numbers from GFMS today.

Any near-term uplift in the price will therefore need to come from the professional investment sector and at present the market has absorbed a lot of risk already and unless there is a substantial exogenous shock in the geopolitical or financial background it is difficult to see much further investment coming through in large volume for the time being.

Meanwhile U.S. Mint figures show that approximate expenditure on gold Eagles in October doubled over September to $17M; year to date, $187M against $281M in January-October last year; expenditure on silver Eagles was $20.1M, up from $176M. Year-to-date; $213M against $232M.

Thought for the week

All the gold ever mined amounts to roughly 196,000t of which 47% or approximately 92,500t is in jewellery form.  At today’s prices that is gold content is worth $4.5 trillion, or twice the proposed flotation value of stock in Aramco.

Chart — Gold and Silver Eagles; approximate monthly expenditure, $M