Gold News

Gold Price Firm, Palladium Spikes Again, Tokyo Threatens Fresh Yen Intervention

The GOLD PRICE edged higher on Monday against a weaker US Dollar as silver held flat but platinum rose and palladium prices spiked dramatically for the 2nd session running while the Japanese Yen remained close to a 34-year low against the greenback despite Japan's top official warning that Tokyo is preparing new intervention in the currency market, writes Atsuko Whitehouse at BullionVault.
With a raft of key politics events due this week, the first presidential election debate between 81-year old incumbent Joe Biden and 78-year old former president Donald Trump is scheduled for Thursday.
The Dollar index – a measure of the US currency's value versus its major peers – today edged lower from its 5-week winning streak, helping spot gold prices in London rally 0.3% to $2329 per Troy ounce after plunging Friday on stronger-than-expected US manufacturing and services sentiment surveys to reverse most of last week's prior 1.6% gold gain.
Silver was unchanged from the weekend at $29.61 – down more than $1 from Friday's high – but platinum rose again through $1000 per Troy ounce, over 6.2% above mid-June's low.
Palladium prices meanwhile spiked nearly 5.5%, briefing jumping again through $1000 per Troy ounce before dropping back to $977 after leaping by more than $100 on Friday only to fall back again from a sudden 4-week high at $1030.
That move suggested "an old fashioned short squeeze" according to a trader at German bullion refiners Heraeus, noting the record bearish speculative position in Nymex palladium derivatives plus "sizable ETF allocation over the last month".
"If there are excessive currency fluctuations, it has a negative impact on the national economy," said Vice Finance Minister Masato Kanda this morning as the Yen hovered at just under ¥160 against the US Dollar.
That's the level at which the Japanese government and the Band of Japan intervened to support the currency in April and May, spending around $61 billion to stall the slide in JPY.
Chart of gold priced in Japanese Yen per gram vs. Japanese Yen per US Dollar (inverted, right). Source: BullionVault
"In the event of excessive moves based on speculation, we are prepared to take appropriate action," Kanda continued, despite the political tensions with Washington of being included in the US Treasury Department's monitoring list for 'unfair' forex management.
"I don't really see much to turn the tide for the [strong] Dollar until the Fed cuts," says one foreign-exchange trader quoted by Bloomberg, pointing to the US central bank's new outlook for just 1 cut to Fed interest rates by the end of 2024.
With Japan holding its key interest rate at 0.1% this month while Switzerland cut again to 1.25% last week, "The Yen and Swiss Franc could stand to suffer the most through the next few months," says the FX trader, "until the Fed moves materially toward easing."
Gold prices in Japanese Yen today edged 0.2% higher to ¥11,950 per gram, rising 26.7% since the start of this year as the currency has lost 13.3% against the Dollar.
"The Bank of Japan's decision not to tighten monetary policy until its next meeting in July has created an environment conducive to Yen carry trades," says Akira Moroga of Japanese commercial bank Aozora, noting the trend in borrowing a low-rate currency to deposit money in higher-rate currencies. 
The BoJ also decided on 14 June not to slow its purchases of Japanese government bonds until at least July, although minutes from the policy meeting released Monday show there was much discussion about tapering its bond buying and raising rates.
The currency has now fallen by 1.8% since that decision, hitting a 7-month low of ¥159 against the Dollar.
"We will adjust the degree of monetary support" if the economy and consumer prices continue to strengthen, BOJ Deputy Governor Shinichi Uchida said on Friday.
Japan's core consumer price index excluding both fresh food and fuel slowed to 2.1% annual inflation in May from 2.4% in April.
Despite the gold price smashing through a series of all-time JPY highs between January and March, Japan saw private investors sell only 1 tonne net of demand for coins and small retail bars according to data published by the mining industry's World Gold Council.
Helped by small inflows into gold ETF products and solid jewellery purchases, that saw total net demand reach 2.2 tonnes during the first quarter of 2024.
"This continued the recent trend of growing investment interest among a younger cohort, which almost matches the continued liquidations more commonplace among the older generation who invested in gold at much lower prices," the WGC explains.
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Japanese was one of the world's largest gold importers during the 1980s and 1990s before China became a major player at the turn of the millennium. Japan then turned into a net exporter in the early 2000s, but gold demand overall has been positive since 2012 except for 2019, registering net household purchases of 15.9 tonnes in 2023.
Gold prices in the Swiss Franc today traded flat around Friday's close of CHF2074 per ounce, up 19.1% since the start of this year as the currency has weakened 5.6% against the US Dollar.
Euro gold prices edged 0.1% lower around €2168 after the latest French opinion poll, published Sunday, said that the far-right National Rally (RN) party and its allies will lead next weekend's first round voting in the snap elections for parliament called by France's centrist President Emmanuel Macron after his big defeat in European elections earlier in June.
With the RN set to win 35.5% of the vote, the left-wing New Popular Front (NPF) alliance polls second with 29.5%, while Macron's centrist alliance is in third place on 19.5%.
Gold prices for the Eurozone's 340 million citizens have risen 16.5% so far this year as the currency has weakened 3.1% against the US Dollar.
The UK gold price in Pounds per Troy ounce meanwhile edged 0.1% higher to £1839 after the Bank of England last week made no changes to Sterling interest rates ahead of the 4th July General Election.
Japan's stock market rose 0.7% Monday while European bourses added 0.6%, cutting their loss for June to 0.5%.
But shares in US tech giant Apple (Nasdaq: AAPL) slipped 1.0% ahead of the New York opening as it was charged with breaching the European Union's digital competition rules in its app store, risking a fine of 10% of global revenues.
"Political risk is up and rising into this week," says a note from Swiss bullion refining and finance group MKS Pamp.

Atsuko Whitehouse is the Head of the Japanese Market at BullionVault and the Editor of Japanese GoldNews.

See all articles by Atsuko Whitehouse here.

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