ALL TIME HIGH FOR GOLD
Although the headline speaks for itself, there are some nuances around gold rallying to $3508 that are worth noting.
Firstly, like the previous all-time-high back in April of this year, the move was deep inside Asian trading hours (02:48 London time) and not during London trading as we might have otherwise expected. Yes, markets have epicentres where liquidity converges and it is London where the gold price discovery process is traditionally set... the global benchmark. One wonders whether that remains the case. For sure, settlement, clearing and gold vaulting are London-centric … even market standards and the rules ... but the weight of trading activity … ??? hmmm.
Secondly, one senses that SILVER opened the door for gold. They have an odd relationship those two metals – like two elderly maiden aunts – no one really understands where the power resides. Silver, usually seen very much as the follower has been reluctant throughout this bull run which commenced in earnest in early 2023. But gold seemingly with half an eye on silver often failed to breach the big numbers on the way up if silver was not authenticating the move. One sensed later that they had simply diverged but yesterday silver breached critical resistance at $40 – a 14 year high - almost as if saying, “go on then gold, have a go”.
As London awakens … and wonders what just happened … I am left questioning where that centre of gravity is. Just like the strange push and pull between magnets - so it is for gold and silver... one influencing the other … but we also see the same dynamic between East and West as regards the gold price. Gold has corrected off its record highs as I write, almost as if to reality-check that the West agrees... maybe some nod to prior influence ... and maybe suggesting a lack of confidence in Asia's new found primacy ?
I think there are two take-aways from things … firstly, in price action there is meaning … it minutely reflects the power balance which shifts … like between those aunts … and secondly I think we can say we are quite unequivocably in a whole new paradigm as regards bullion. Yes we know gold reflects the “sum of all fears” better than any other barometer … but is it also perhaps signalling a changing of the guard ? Too early to say.
This has been the most extraordinary bull run in that it has been a low participation one as far as Western investors have been concerned (institutional and retail) ... a sort of stealth rally ... but seen from afar ... well, Asians clearly have a very different perspective and their conviction is certainly much higher.
Ross Norman
CEO
Metals Daily
www.MetalsDaily.com