"World Insecurity" May Have "Positive Impact On Gold" - Ex BOE Mervyn King

Today’s AM fix was USD 1,308.25, EUR 977.33 and GBP 779.37 per ounce.
Friday’s AM fix was USD 1,317.50, EUR 984.02  and GBP 784.23 per ounce.

Gold fell $0.20 or 0.01% on Friday to $1,311.40/oz and silver rose $0.01 or 0.05% to $19.97/oz. For the week, gold rose 1.40% and silver slipped 1.82%.

Mervyn King at Diggers and Dealers Conference in Perth

Gold is marginally higher in London this morning after gold in Singapore fell to test $1,305/oz overnight. Futures trading volume was 40% below the average for the past 100 days this morning and trade remains lackluster with many traders on holidays.

Geopolitical tensions remain high and should support gold. Yesterday, artillery shells exploded on the outskirts of the Ukrainian city of Donetsk as government forces aggressively targeted and called on pro-Russian separatists to surrender.

In the Middle East, the United States conducted a third day of air strikes in Iraq yesterday against the Islamic State insurgent group. Israel and the Palestine held their fire early on Monday at the start of a new 72 hour ceasefire proposed by Egypt.

Silver for immediate delivery fell 0.3% to $19.84 an ounce. Spot platinum fell 0.3% to $1,470.63 an ounce, while palladium was flat at $864 an ounce.

Premiums for gold bars in India remain low. Chinese gold premiums remain at $2 to $3. While silver premiums are rising as silver inventories on the Shanghai Gold Exchange (SGE) have fallen significantly in recent months.

"World Insecurity” May Have “Positive Impact On Gold" - Ex BOE Mervyn King
In his keynote address to the Diggers and Dealers conference in Perth, former governor of the Bank of England Mervyn King had positive thoughts on gold, arguing world insecurity could have “a positive impact on gold.”

He said that global geopolitical and economic uncertainty will boost commodity prices including gold.

Gold in U.S. Dollars - 5 Years (Thomson Reuters)

He also warned that all countries would have to face up to mounting debt levels and said that central bank’s ultra loose monetary policies were not the answer.

"We are beginning to discover that the reason the world recovery is so slow is that monetary policy isn't the answer now, and other policies need to be put in place to rebalance the world economy," he said.

"No one country on its own will find it easy to do this.”

"It will require a recasting of relationships between different major economies and that requires an acceptance that trade surpluses will have to diminish in order to allow the countries that previously borrowed a great deal to to reduce their trade deficits, and gradually reduce their indebtedness”.

"That requires a change to the global economy as a whole, not just to any one country."

King echoed the IMF’s Lagarde recent declaration that the world needs a “global economic reset”.

See our important guide to coming ‘reset’ here Currency Wars: Bye, Bye Petrodollar - Buy, Buy Gold