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October 30, 2018

How LBMA aims to bring transparency to Gold Market?

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Gold futures traded lower on Monday, dropping approximately 5 USD, marking its lowest finish in a week.

Analysts and market participants pointed at the Dollar index which moved higher and approached Friday’s 10-week high compared to a basket of its main rivals.

Stronger US dollar makes the bullion more expensive for other currency holders.

At the moment, the precious metal has fallen by more than $9 an ounce from the more than three-month high.

Gold prices dropped even lower on today during the European open as the U.S. dollar strengthened further due to worries over slowing economic growth and fears that the Sino-U.S. trade war could resurface.

It all comes down to next month’s meeting between presidents Donald Trump and Xi Jinping and the outcome of the event.

If a solution between the presidents is found or progress made, fear is off the table and Gold prices could resume to higher levels.

On the contrary, if an agreement is not reached, the US is to announce tariffs on all remaining Chinese imports by early December, according to Bloomberg.

Also as US Bond price and yield movements are associated with Gold movements, negatively or positively according to each scenario, yesterday the 10-year note yield fell slightly on the US Sino news along with the 30-year bond yield making similar moves.

The two-year note was also down less than half a basis point from the open.

As mentioned before, Gold traders may have ignored the US bond yield movements as bullion was also down yesterday and focused more on the US Sino matter and the subsequent strengthening of the USD, as it affects a broader part of the world and not solely the US.

Moreover from the U.S, the consumer spending for September increased for a seventh month in a row indicating that the economy is still in a great shape.

Then again, income had its lowest gain in more than a year on moderate wage growth for September and could be losing its positivity.

The outcome of the pre mentioned financial releases is somewhat mixed and caution is advised because gold prices could strengthen if consumption growth decreases in the following months due to a weakening USD.

On other news, the London Bullion Market Association (LBMA) the world’s largest gold market, will start making data publicly available by 20th of November.

This can provide Gold followers an in depth insight of Gold trading in London.

Due to its massive trading activity, the LBMA data to be released, has the power to create further volatility on Bullion prices, but also a measure of what the future could be for the precious metal trading activities.

LBMA will initially make a start providing weekly reports and after a specific timeframe will prepare daily reports.

It was said that the LBMA aims to bring transparency and reliability back in the market after various sources accused financial institutions like banks and traders for price manipulation.

Gold prices moved higher in the previous weeks from the recent risk off environment in markets over the past two weeks but the recovery could be a short-lived one, keeping in mind that the upcoming US employment report which is forecasted to be bullish for the USD and could provoke a selloff for the precious metal.

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Gold has been on a bearish run during the past days starting since last Friday.

If Gold is overtaken by a bearish movement we may see the precious metal dropping below the (S1) 1218.64 and moving even lower, aiming for the (S2) 1210.66 support area.

It must be noted that the precious metal has not broken below the (S1) 1218.64 level since the 11th of October.

On the contrary if Gold is undertaken by a bullish momentum then it could move towards the (R1) 1232.93 level and stabilize around that level.

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