This morning the Gold price is holding near a two-week high as speculators turn to alternative investment, having been disappointed by equities’ performance yesterday. The Dow Jones Industrial Average stopped its five-day climb after the World Bank made a downward amendment to its growth forecasts.
Yesterday in China, where there have been concerns over the subdued levels of gold demand, volumes for the benchmark contract in Shanghai rose to a two-week high of 15,176kg.
Speaking of China, Reuters this morning have an interesting story on Chinese banks starting trial imports of gold through the Shanghai Free Trade Zone ahead of the launch of the gold exchange. The new exchange is currently being developed by the Shanghai Gold Exchange who are in talks with private and foreign banks, in a move to have greater control of the international gold market. The move to import gold through the Free Trade Zone will further obscure gold import figures which are already questionable given the official figures are only taken from Hong Kong export figures.
Is there any stopping palladium?
As has been the case for most of the year palladium continues to outshine its fellow precious metals. Currently at $862/oz, there are many commentators who believe it could reach $1,000/oz before the end of the year. Yesterday holdings in palladium backed exchange-traded products grew to 91.93 tons, an all-time record according to Bloomberg.
The main drivers for palladium continue to be the ongoing wage negotiations (and resultant production standstill) as well as the increasing demand for vehicles in China. It has been in an uptrend since February.
How to deal with illegal mines
There is an interesting story on Bloomberg this morning about the government crackdown on illegal mining, and its effect on those who are mining legally. The report explains that the government are using dynamite to blow-up several hundreds of thousands of pounds worth diggers, in a bid to stop illegal mining.
It is estimated that there are 30,000 illegal mining operations going on in the country, compared to 58,000 government-approved small mining operations. However the government appears to be showing little discretion between the illegal and legal mining sites. This has, reportedly, had a major impact on the country’s gold exports. According to Bloomberg, the Latin American country is the continent’s largest gold producer. Last year the country exported 172 tons of both legally and illegally mined gold.