Gold reversed course Thursday, along with a broad spectrum of commodities, paring the gains scored earlier against the reserve currencies. Still, bullion managed to eke out a 0.7 percent advance vs. the yen and moved ahead 0.6 percent against sterling. The Swiss franc gave up 0.2 percent to gold, while the euro gained 0.1 percent.
U.S. dollar-denominated assets traded in a slightly inflationary direction this week.
- On Thursday morning, London gold was fixed at $1,424, off 0.4 percent for the week; interim fixes averaged $1,429; spot metal settled at $1,412 on COMEX, down 0.3 percent; average daily volume jumped 17.3 percent to 202,626 contracts; open interest picked up 2,424 contracts to finish at 521,137.
- COMEX gold inventories fell by 48,737 ounces (1.5 tonnes) to 11.098 million; stocks now cover 21.3 percent of open interest; immediate demand for COMEX bullion amounts to no more than 3,700 ounces, while 2.387 million ounces are in a deliverable position.
- Bullion assets of the SPDR Gold Trust (NYSE:GLD) increased by 6.7 tonnes (214,574 ounces) to 1,217.3 tonnes.
- Gold’s projected volatility, tracked by the average of the CBOE Gold Volatility Index (CBOE: GVZ), moved up another 0.6 points to 17.3 percent.
- One-year gold lease rates backpedaled 2 basis points (0.02 percent) to average 0.30 percent.
- Junior miners again won the volatility derby; a 6.7 percent decline in the share price of the Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) was met with a 5.1 percent loss in the larger-cap producers comprising the Market Vectors Gold Miners ETF (NYSE:GDX); the S&P 500 Composite gave up 2.7 percent.
- The S&P benchmark’s correlation to GDX shot up 12 points to 27 percent; against bullion, the index’s correlation slipped 6 points to -31 percent.
- After considerable volatility, WTI spot crude oil ended up just 0.8 percent higher at $102.70; the gold/oil multiple dropped from 14.3x to 13.7x.
- Implied finance rates embedded in COMEX gold futures held relatively steady this week; the discount to one-year Treasurys ticked up 1 basis point, reflecting expectations of steady to slightly higher rates; the one-year COMEX contango eased by 30 cents, or 3.1 percent, to $9.50 an ounce.
- The one-year TED spread picked up a basis point to average 0.53 percent.
- The Treasury yield curve steepened 10 ticks to 451 basis points as long bond yields rose to 4.60 percent.
- The euro fell 0.3 percent against the U.S. dollar, averaging a $1.3929 cross rate in interbank trading.
- Daily readings of the Monetary Inflation Index’s one-year rate averaged 1.6 percent, up from 1.5 percent last week; at today’s rate, the real return on 3-month Treasury bills is -69 basis points.
Real-time Monetary Inflation Rate
Note: Explanations of the Scorecard’s indicators can be found in the Hard Asset Investors’ primer articles, “Deciphering The Inflation Scorecard: Why Gold?” and “Deciphering The Inflation Scorecard: Part 2.”
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