The European common currency found an ally this week in its battle against bullion. Both the euro and the Swiss franc appreciated versus gold — the euro by 0.6 percent and the franc by 0.1 percent. Other reserve currencies lost ground to gold, but bullion scored new records only against the US dollar. Sterling eased 0.4 percent and the yen yielded 0.2 percent this week.
For the week ending Thursday, the greenback's performance could be measured by these yardsticks:
- London gold was fixed Thursday morning at $1,311, up 1.5 percent, after averaging $1,301 for the week; the last COMEX spot settlement, at $1,308, was 1.0 percent higher on the week; average daily COMEX gold volume jumped 20.1 percent to 147,892 contracts; open interest rose 6,502 contracts to 617,188; COMEX gold stocks increased by 79,926 ounces (2.5 tonnes) to 10.897 million; warehouse inventories now cover 17.7 percent of open interest.
- One-year gold lease rates held steady at 27 basis points (1 bp = 0.01 percent); three-month contract rates fell 4 bps.
- SPDR Gold Shares Trust (NYSEARCA:GLD) vault assets increased 3.3 tonnes (107,480 ounces) to 1,304.8.
- Investors shied from risk this week, expressing a preference for established gold producers over junior mining issues; the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) lost 1.8 percent while the larger-cap Market Vectors Gold Miners ETF (NYSEARCA:GDX) rose 0.3 percent; the GDX/GDXJ ratio averaged 1.66 this week vs. 1.63 last week; the S&P 500 Composite Index's correlation to senior gold miners ticked up 3 points to 9 percent, while the blue-chip benchmark's correlation to bullion fell to -20 percent.
- WTI crude oil prices shot up 6.4 percent to $79.97 a barrel; the gold/oil multiple fell to an average 16.8x this week compared with last week's 17.2x.
- The one-year TED spread — a metric of interbank lending risk—inched down 1 bp to 0.52 percent while the three-month spread was unchanged at 0.14 percent.
- Embedded finance rates in the COMEX gold term structure maintained an average 27 bp discount to one-year Treasurys; rates have stabilized over the past several weeks, but still suggest lower yields in the future; the one-year gold contango rose 14.8 percent to an average $9.90 an ounce.
- The average yield on the long Treasury bond slipped from 3.81 percent to 3.71 percent; with rates stable at the short end, the yield curve flattened 0.10 percent to 356 bps.
- The euro gained 1.9 percent on the US dollar, finishing the week at $1.3612.
- Daily reads of the one-year monetary inflation rate averaged -0.9 percent this week vs. -2.0 percent last week; at today's rate, the real return on three-month Treasury bills is 48 bps.
Real-Time Monetary Inflation
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Disclosure: No positions
