(Kitco News) – The U.K.’s Royal Mint and exchange operator CME Group are collaborating to create a blockchain-based digitized gold-trading platform meant to cut the cost of trading the precious metal, the two entities announced Tuesday.
Under the new platform, scheduled to begin sometime in 2017, the Royal Mint will issue “Royal Mint Gold,” with a digital record of ownership for metal stored at its on-site bullion vault storage facility. CME Group will develop, implement and operate the product’s trading platform. This will allow market participants to trade RMGs between themselves, with some news organizations characterizing this as over-the-counter trading.
One RMG will represent one gram of gold.
A news release from the organizations says the new service will provide an “easier, cost-effective and cryptographically secure alternative to buying, holding and trading spot gold.”
A number of news organizations are describing the blockchain technology as transparent and tamper-proof, at least so far. This was the technology used to build bitcoin, some reported.
The Royal Mint is a 1,000-year-old institution owned by HM Treasury and permitted to produce British coins. CME group is a U.S.-based derivatives exchange.
“The Royal Mint has a unique history and a trusted reputation earned over many centuries trading in gold but until now, there hasn’t been a way to digitally trade physical gold,” said Vin Wijeratne, chief financial officer of the Royal Mint. “Developing a trading platform with CME Group will satisfy customer demands for faster, cost effective and secure ways to buy, hold and sell gold and complement our existing products.”
David Janczewski, director of new business at the Royal Mint, said that “distributed ledger technology is a game changer and supplying gold on a blockchain has been on our minds for some time.”
CME Group will launch a digital-trading platform that will operate 24 hours a day, 365 days a year. Unlike the traditional physical spot cost model for investing in gold that levies for management fees and ongoing storage charges, RMGs will offer ownership of the underlying gold with the option for conversion to physical gold by the Royal Mint with no storage cost.
The initial amount of RMG at launch could be up to $1 billion worth of gold, reported the Royal Mint and CME group. It will be offered through investment providers. Further RMG will then be issued based on market demand.
“Developing a digital gold trading platform will help ensure that CME Group’s current product offerings meet the evolving needs of the global marketplace,” said Julie Winkler, senior managing director, research, product development and index services at CME Group.
“As we continue to expand our global footprint and develop new products, this platform will help set standards for digital assets in financial markets.”
(Kitco News) – Speculation that President-elect Donald Trump can boost the U.S. economy with a massive fiscal plan has helped push U.S. bond yields to their highest level in more than a year, the U.S. dollar to a 13-year high and gold reserve in exchange-traded funds to their lowest level five months.
More than $2 billion in Gold has flowed out of the world’s bigest physical gold ETF in NovemberReserve data compiled by SPRD Gold Shares (NYSEARCA: GLD) shows that gold holdings in the world’s largest ETF totaled 885.04 tonnes as of Monday, the lowest level since June. November has been one of the worst months in terms of outflows in the last three years as GLD gold reserves have dropped by 57.55 tones, with the heaviest selling occurring after Trump’s Nov. 8 election win.
Taking the average gold price from the London Bullion Market PM Gold Price, the outflows seen in GLD total more than $2.3 billion in the past month.
However, despite the heavy selling since early November, gold reserves are still up for the year by 242.67 tonnes, given the unprecedented demand seen in the first half of the year.
Analysts at Commerzbank said in a report Tuesday that heaving ETF redemptions in the last 12 consecutive sessions has been the biggest drag on prices. Currently, gold prices are trading near their lowest levels since February and are down more than 6% since the start of the month. February Comex gold futures settled Tuesday at $1,190.80 an ounce, down 0.24% on the day.
Mike Dragosits, senior commodity strategist at TD Securities, said in a telephone interview with Kitco News that although prices have been dragged lower as investors focus on Trump’s economic policies and expected Federal Reserve interest rate hike on Dec 14, he thinks that a bottom could be in place, at least in the near-term.
“Even though we have broken below the key support level at $1,200 an ounce, we haven’t seen a lot of follow through on the downside,” he said. “I think at these levels, the bearish sentiment is overdone. I think a lot of the big selling has stopped and we could see prices stabilize.”
Dragosits added that his firm is expecting to see a bounce in gold, as it expects the Fed to be less aggressive than economists and markets are expecting.
“I think a 25-basis-point hike is already baked in but I don’t think the Fed is going to signal a very aggressive stance for 2017,” he said. “If the Fed is too hawkish in their expectations for 2017, they could risk hurting U.S. economic growth.”
(Kitco News) – As markets intensify their focus towards the Federal Reserve’s next meeting in December — when most expect a rate hike to occur — and as more Fed officials come out of the woodworks commenting on the matter, one former Fed Chair says it is crucial for the central bank to find an optimal communication strategy with market participants.
Fed Communication: What Is It Good For? “A common complaint is that the volume of such communication is ‘cacophonous’…I have some sympathy with the ‘cacophony’ complaint.” noted Ben Bernanke, Fed chair from 2006 to 2014, in his latest blog post for the Brookings Institute.
In an effort to provide guidance and increase transparency, the central bank has communicated more with the marketplace in recent years, releasing quarterly economic and interest rate projections as well as more Federal Open Market Committee members speaking out in public.
Bernanke highlighted the tendency of individual FOMC participants to make public statements and forecasts may not necessary be a helpful communication vehicle simply because analysts deem these comments as what the committee will do as a whole rather than what the individual member thinks would be the best policy approach.
“The FOMC is a large and diverse committee, and the incentives that individual governors and presidents have to speak publicly about monetary policy probably don’t add up to an optimal communication strategy for the committee as a whole,” he explained.
For Bernanke, it is really the Fed’s Summary of Economic Projections (SEP) that is key in the Fed’s communication strategy to the public. The SEP, which comes out every quarter and puts together member forecasts for key economic metrics, can be a useful communication tool for the central bank, only if analysts “appreciate how it is constructed and what is does and does not represent.”
“The Summary of Economic Projections remains a controversial part of the Fed’s communications toolkit, and it has sometimes confused more than enlightened,” he said.
But, the issue lies in the fact that Fed-watchers do not fully understand the mechanics behind the SEP report, he added.
“To make use of the SEP, Fed-watchers must appreciate what the SEP is not,” Bernanke said, which he claims is not a policy commitment by the FOMC, it is not an unconditional economic forecast nor does it capture statistical uncertainty for the range of possible outcomes.
What’s more, Fed-watchers should understand what the SEP is “good for,” he continued.
“The FOMC is not a simple democracy but a consensus-driven organization, with the agenda set by the chair,” he explained. “I think of the SEP as a straw vote, a reflection of the range of sentiment going into the full committee debate.”
Likewise, the report provides information of key long-term parameters as well as provides useful quantitative information about why projections of future interest rates change over time, he argued.
Despite the advantages highlighted by Bernanke on the Fed’s current communication tactics, particularly through the SEP, he still thinks there is much to be done.
“The FOMC should continue to look for improvements, ranging from the marginal (a better accounting for uncertainty and alternative scenarios, for example) to the more fundamental (a possible revisiting of the idea of developing a collective committee forecast),” he said.
“That said, in its current form the SEP does provide useful information about the views of FOMC participants and the factors that condition their policy preferences.”
The spot gold price eased during Asian trading hours on Friday November 25 as a strong US dollar continued to weigh on the yellow metal.
The spot gold price was recently quoted at $1,176.65/1,176.95 per oz, down $9.10 on the previous close. Trade has ranged from $1,171.33 to $1,186.72 so far, the lower end being the lowest since February 8 this year.
“Technically, a weekly close below $1,201 will signal a short-term bearish tone while a break below $1,179 cash would see $1,130 being re-tested soon,” Commerzbank said in a report late on Thursday.
The US dollar index has continued to strengthen amid positive US economic data while putting pressure on the gold price. The index had reached as high as 102.05 on Thursday, the highest since March 2003. It was recently at 101.74 on Friday, up 0.05% from the previous close.
The US is closed for Thanksgiving holiday on Friday which should result in quieter trading leading into the weekend, Commerzbank said.
In other commodities, the Brent crude oil spot price increased 0.12% to $48.92 recently in the day.
In equities, the Shanghai Composite fell 0.36% to 3,229.97 so far on Friday.
Key US economic data due later today includes goods trade balance, preliminary wholesale inventories and flash services PMI.
In the other precious metals, the spot silver price fell $0.075 to $16.25/16.27 per oz. Platinum at $906/911 per oz was down $6 while palladium was eased $3 to $725/731 per oz.
On the Shanghai Futures Exchange, gold for June delivery was recently at 269.20 yuan ($39) per gram, and the June silver was at 4,103 yuan per kilogram.
– See more at: https://www.bulliondesk.com/gold-news/asia-gold-gold-slips-below-1-180oz-as-us-dollar-weighs-124502/#sthash.h9GpyY5q.dpuf
Copper and zinc prices closed up over 1% yesterday November, 24 with three-month copper prices closing at $5,893 per tonne, while aluminium and nickel prices closed down by an average of 0.8% and lead and tin were little changed. Platinum prices fell 1.5%, spot gold prices were down 0.3% at $1,185.90 per oz, while palladium and silver prices were little changed.
This morning the base metals are consolidating, three-month lead prices are up 0.8%, zinc prices are up 0.6% and copper prices are up 0.3% at $5,882 per tonne, aluminium and nickel prices are little changed, while tin prices are down 0.9% at $21,100 per tonne. Volume as of 06:44 GMT has been 10,059 lots.
Precious metals are weaker across the board with spot prices down an average of 0.5%. Spot gold prices have been as low at $1,171.33 per oz, but were recently quoted at $1,180.10 per oz.
In Shanghai, January zinc prices are up 3.1%, followed by lead prices that are up 2.6% and copper prices are up 1.7% at Rmb 48,100 per tonnes, nickel is little changed, while tin prices are off 1.7% and aluminium prices are down 1.4%. Spot copper prices in Changjiang are down 0.7% at Rmb 47,920-48,120 per tonne, the spread between spot and the January date is all but flat, while the LME/Shanghai copper arbitrage window remains open with the ratio at 1:8.19.
In other metals in China, January iron ore prices are up 4.5% on the Dalian Commodity Exchange, on SHFE, steel rebar is up 6.1%, gold prices are down 1.5% and silver is off 0.1%. In international markets, spot Brent crude prices are down 0.8% at $48.47 per barrel.
Equities – the Euro Stoxx 50 and Dow both closed up 0.3 percent yesterday and this morning Asian equities are firmer with the Nikkei up 0.3, the Hang Seng is up 0.6%, the CSI 300 is up 0.9%, the ASX 200 is up 0.4% and the Kospi is up 0.2%.
In FX, the dollar index’s rally has halted up in high ground, with the index recently quoted at 101.46, having been as high as 102.05. Any correction in the dollar could lead to broad based consolidation as traders adjust to the roller-coaster moves that have been seen since the US election. The euro seems to be attempting to rebound, it was recently quoted at 1.0598, as are the yen at 113.02 and the aussie at 0.7460, while sterling is flat at 1.2465. Emerging market (EM) currencies, having been weak in recent weeks, are showing some signs of attempting to rebound, this ties in with early signs of consolidating in the dollar.
On the economic agenda, Japan’s CPI data showed falling prices, although the Bank of Japan’s reading of core CPI show prices rising 0.3% and the service PPI climbed 0.5% from a prior reading of 0.2%. Later there is UK data on GDP, business investment, index of services and CBI realised sales, Italian retail sales with US data including goods trade balance, wholesale inventories and flash services PMI – see table below for more details.
The rebounds in base metals prices after last week’s corrections have been impressive, but the higher prices do seem to have run into supply, at least for most of the metals, the exception is zinc that has set a fresh high this morning at $2,767 per tonne, basis three-months. Generally although we are bullish for most of the metals’ fundamentals it does seem as though the rallies over the past month have run prices ahead of the fundamentals, so we would not be surprised to see consolidation set in as the market absorbs scale up selling.
The strong dollar, prospects for US interest rate rises and brighter opportunities in other asset classes, have led to long liquidation in gold, silver and platinum. Palladium has bucked the trend, as it has followed equities more. Given there is still a lot of uncertainty out there in the political arena, we would have thought the pullback in gold prices would start to attract bargain hunting, especially if the rallies in other markets start to show signs of tiring.
– See more at: https://www.bulliondesk.com/gold-news/metals-morning-view-dip-gold-price-runs-into-buying-base-metals-prices-consolidate-124505/#sthash.b0VXD38S.dpuf
BEIJING, Nov 27 (Reuters) – Current conditions point to a stabilisation of China’s yuan after a volatile recent performance against the U.S. dollar, a central bank vice governor said on Sunday, adding that the currency remains strong.
The yuan’s decline in value has accelerated since Donald Trump’s surprise victory in Nov. 8’s U.S. presidential election and it plumbed 8-1/2 year lows versus the dollar last week.
“(China’s) international balance of payments are basically stable, the merchandise trade surplus remains relatively large, and the Chinese yuan has the conditions to remain basically stable within a reasonable range in the future,” People’s Bank of China vice governor Yi Gang said on state TV.
Yi said the yuan showed characteristics of a strong currency as it has fallen less than other currencies against the dollar in recent weeks and rose versus other units in October, according to the official Xinhua news agency.
He said the yuan’s volatility had been due mainly to unexpected events including Trump’s election, a sudden increase in expectations that the Fed will raise interest rates, and Britain’s vote in June to leave the European Union.
“The movement of the U.S. dollar going forward is uncertain, and we can’t rule out the possibility that changing market expectations will cause some decline in the dollar,” Yi was quoted as saying.
The yuan has fallen more than 6 percent versus the dollar this year, including about 2 percent since Trump was elected, but has been relatively stable against a basket of currencies.
China’s foreign currency reserves have fallen to their lowest since March 2011 with the PBOC widely believed to have sold U.S. dollars to cushion the currency’s decline.
Yi predicted that capital outflows seen after August 2015’s surprise devaluation of the currency, which sparked fears the health of the economy was worse than Beijing had let on, would start to reverse, and said China’s foreign currency reserves are sufficient.
“As China’s economy recovers and institutional reform improves the business environment, the money that has left will come back,” Yi said.