The GOLD PRICE rose back through $2000 per ounce on Tuesday, extending April's surge to new record month-average prices despite continued weakness in gold ETF inflows as London's physical market returned from the May Day Bank holiday and US banking shares fell further after the failure and takeover by J.P.Morgan of First Republic.

 

Shrinking 0.2% on Monday, the giant SPDR Gold Trust (NYSEArca: GLD) had already ended Friday 0.2% smaller for April, while No.2 gold ETF the iShares product (NYSEArca: IAU) had expanded by just 0.6% across the month.

 

Together, that means the combined size of the world's 2 largest gold-backed ETF products is now almost entirely unchanged from the end of October, since when the Dollar's month-average gold price has risen 20.1% from that 2.5-year low.

 

That snaps the more typical pattern of gold ETFs expanding or shrinking in line with gold prices rising or falling.

 

 

Gold priced in all 4 major central-bank reserve currencies set a new all-time month-average high in April, trading at $2000 per Troy ounce across the month – £1606.62 and €1822.54 per ounce, ¥8584 per gram – and also setting new record monthly prices in most other currencies including the Chinese Yuan and Indian Rupee.

 

Besides the continued strength of inflation, "The difference this time versus previous [gold price] peaks in 2011, 2020 and 2022," says strategist Nicky Shiels at Swiss refining and finance group MKS Pamp, "is the US Dollar is currently stronger...[plus] persistent central-bank demand [while] known investor demand [gold ETFs plus Comex derivatives positioning] is underinvested."

 

Together this makes for a "quieter rally that's under the (media) radar," Shiels says, adding that "physical [consumer] demand [is also looking] less price elastic now" versus gold's previous price peaks.

 

Wholesale gold trading in the metal's No.1 consumer market of China remains shut for the May Day holidays until Thursday. But the premium for metal landed in Shanghai over London quotes last week rose to average $6.85, the highest in 3 weeks and barely $1 per ounce below the long-term historic average incentive to new imports, suggesting solid if not exceptional domestic demand.

 

Priced in the Yen, gold yesterday set a fresh all-time spot market high at ¥8817 per gram as the Japanese currency fell further on the FX market after the Bank of Japan's first policy decision under new governor Kazuo Ueda on Friday stuck with Tokyo's decades-long strategy of negative interest rates and massive QE bond purchases.

 

Japan's manufacturing sector shrank for the 6th month running in April, new data said yesterday, but the pace of contraction slowed according to the Jibun Bank PMI survey, with "New order volumes show[ing] further signs of stabilising."

 

While the JPY gold price slipped back 0.4% by Tuesday lunchtime in London, the Yen extended its currency-market losses, reaching its weakest since early 2016 against the British Pound, since September 2008 against the Euro, and since 1982 against the Swiss Franc.

 

Versus the US Dollar, in contrast, the Yen today traded some 9.8% above last October's 3-decade lows.

 

US banking stocks meantime slipped another 2.5% after the weekend's acquisition of First Republic (NYSE: FRC) by giant finance firm J.P.Morgan, which saw JPM pay $10.5 billion to regulators to cover federal deposit insurance in return for what had been a $20bn business as recently as the start of last month.

 

"This part of the crisis is over," said JPM CEO Jamie Dimon, warning that recession and rising interest rates pose a "whole different issue" to loans made against commercial real estate.