Gold Glows and Silver Shines
Both gold and silver consolidated in a tight range close to all-time highs this week. Spot gold traded at $2660 in European trade this morning, up $3 from last Friday’s close, and silver was $32.05, up 43 cents on the same timescale. Comex volumes in both metals declined over the week, consistent with a consolidation.
The passing of October Comex contracts has led to a jump in gold stands-for-delivery, amounting to 10,840 contracts representing 1,084,000 ounces (32.6 tonnes) in the last four trading sessions, and 1,155 silver contracts representing 5,775,000 ounces (179.6 tonnes).
Interestingly, there is evidence of overnight Asian demand returning, which is likely to be from the Middle East given escalating tensions in the region. This week has seen attacks and a ground invasion by Israel into Lebanon attacking Hezbollah, and a missile attack by Iran against Israel. At the time of writing, we await the Israeli’s response, thought by many likely to be an attack on Iran’s oil refinery at Abadan on the Shatt al-Arab. An escalation of this sort would certainly drive oil prices sharply higher, because the Hormuz Strait would be effectively closed because cargos would be uninsurable.
WTI crude jumped 11% from its low on Monday morning to $74.30 today, reflecting these concerns. But it appears that wider financial markets are sleepwalking through a rapidly developing Middle East war. The assumption appears to be that America is not involved, so there’s nothing to see. But as informed commentators, such as Gilbert Doctorow now points out on hi
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