Comex and GLD Options Push Gold to 25th Record Price of 2024
Friday, 9/13/2024 15:42
HEAVY SPECULATION in Comex gold and GLD ETF options extended the precious metal's 2024 bull market yet again on Friday, pushing the price to fresh record highs in most other major currencies as betting rebounded that the Federal Reserve will cut US interest rates from today's 2-decade high by a half-point rather than a quarter-point at next week's September meeting.
Having dropped to fewer than 1-in-7 positions in Fed Funds futures
mid-week on mixed US inflation data, bets on the Fed cutting by 0.5 percentage points on Wednesday jumped towards 1-in-2 of all open positions according to the CME derivatives exchange's FedWatch tool.
Columnists in both the
Wall Street Journal and the
Financial Times report appetite for an aggressive start to the Fed's rate-cutting cycle among former Fed policymakers and advisors.
Peaking at $2583 per Troy ounce in spot-market trade, gold prices fell $10 into the 3pm London auction, but fixed at the 25th new benchmark high of the year in Dollar terms while setting fresh records in Euros, Sterling, Canadian and Australian Dollars.
Gold in Shanghai had earlier set another record high in Chinese Yuan above ¥583 per gram.
But weak demand in China – the precious metal's No.1 mining, importing, central-bank buying and household consumer nation – held domestic prices $10 below London quotes as the long Mid-Autumn Festival weekend began, more than reversing the typical incentive of $8 per ounce offered to new bullion imports by the Shanghai premium.
"When so many [financial] traders take optimistic positions on the futures market, there is
usually a risk of a correction," says German newspaper
Handelsblatt.
"If prices fall in the short term, this could trigger sales. But the price of gold has only known one direction for weeks. Over the past three months, it has risen by around ten percent."
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As gold prices jumped to new highs Thursday, trading volume in the CME derivatives exchange's Comex gold futures contracts jumped over 26% from September's previous daily average, and it leapt by 80% in the more highly-leveraged options contracts.
"Retail investors are pouring into CME Group Inc's micro gold futures," says Bloomberg, reporting that
average daily volume so far this year in these contracts – one-tenth the size and therefore cost of the CME's benchmark Comex gold futures contract – has now topped the 2020 full-year record by more than 15%.
Yesterday also saw the giant SPDR Gold Trust (NYSEArca: GLD) – the world's largest gold-backed exchange-traded fund – expand 0.5% in size as demand for its shares grew on the stock market, taking the quantity of gold needed to support its value higher for a 3rd session running to the largest since the start of January.
But while the GLD – on which the CBOE derivatives exchange offers weekly options contracts, finding
relatively large retail-trader participation compared with other US stock options – has now expanded by 0.9% so far in September, the 3 next largest US
gold ETFs have grown only 0.3%.
Options are also available on the No.2 gold ETF, the IAU product, but only one per month. And by notional weight, open interest in the weekly GLD call options expiring on 18th October ended last night 117 times larger than open call contracts in the IAU expiring the same day, with the value of put options more than 12 times greater.
In physical bullion in contrast, demand on BullionVault – now caring for more than $3.6 billion in gold for over 100,000 users from 175 countries worldwide – rose 14% over the 24 hours to 9am New York time Friday from its previous 30-day average. But selling jumped by 298%, leading to net liquidation of almost 0.1 tonnes, as
investors again took profit at gold's latest all-time highs in Dollars, Euros and UK Pounds.
With gold bullion fixing close to $2574 per Troy ounce today in London and making a 2.7% weekly jump for US investors, the Euro price set new highs above €2320 and the
UK gold price in Pounds per ounce fixed at a fresh record around £1959.
Silver also extended its surge, hitting the highest Dollar price since mid-July at $30.75.
That pulled
the Gold/Silver Ratio down towards 85, the smallest since late August but still elevated compared to gold's historical value in terms of the more industrially useful precious metal.
Platinum meantime set a new record discount to gold prices, trading more than $1620 per ounce below the 'safe haven' metal.
Platinum prices also widened their discount to sister-metal palladium, trading more than $70 lower even as it rose above $1000 per Troy ounce for the first time in 8 weeks at London's PGM benchmarking auctions.
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