Oct 29

Gold Decreases to $1,223.95 an Ounce Awaiting Fed News

Gold Price Comments Off on Gold Decreases to $1,223.95 an Ounce Awaiting Fed News

Gold was down on Wednesday as investors awaited more information from the U.S. Federal Reserve regarding interest rate hikes, according to Reuters.

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Sep 29

Gold Bullion "Faces Aggressive Shorting" as Hong Kong Protests Grow Ahead of China’s Golden Week Holidays, US Jobs Data Loom

Gold Price Comments Off on Gold Bullion "Faces Aggressive Shorting" as Hong Kong Protests Grow Ahead of China’s Golden Week Holidays, US Jobs Data Loom
GOLD BULLION prices rose to $1223 per ounce in London on Monday, 0.4% higher from last week’s close, before slipping back as world stock markets cut their earlier losses.
 
Hong Kong’s main stock index lost 2.0% as pro-democracy protests spread across the city.
 
The US Dollar dropped from new 4-year highs on the currency market, helping food commodities bounce from multi-year lows.
 
Silver dropped in early Asian trade, before tracking gold bullion’s rally to stand unchanged from Friday’s finish above $17.60 per ounce.
 
“Quiet physical demand in China this week could leave gold lacking crucial support,” writes Jonanthan Butler at Japanese conglomerate Mitsubishi, pointing to the Golden Week holidays starting Tuesday.
 
“Though short covering may offer upside,” Butler adds, noting heavy bearish betting by speculative traders in US futures and options, “quarter-end squaring may leave investors with little appetite for gold in the coming days.”
 
Tuesday also marks the new Martyrs’ Day in China, aimed “to commemorate those who sacrificed for their country,” according to the New York Times.
 
Tens of thousands of protesters continued to block Hong Kong’s main business district Monday, extending the weekend’s march against Beijing’s refusal to allow a free choice of candidates in the city’s 2017 leadership elections.
 
Beijing’s censorship of social media site Weibo hit new record levels during this weekend’s protests, says the South China Morning Post.
 
“Usually a lot of Chinese tourists come to Hong Kong for the holiday,” Reuters quotes German bullion refining group Heraeus’ general manager in the city, Dick Poon.
 
“[Typically] they end up buying jewellery, but this time they might be turned off by the protests.”
 
This week’s absence of China’s wholesale dealers, says Swiss refiner MKS’s Asian desk, “could heap added pressure on gold,” especially if “combined with another strong US payrolls figure expected this Friday.
 
“This is a very similar scenario to last year where gold was aggressively sold by speculators during the absence of the Chinese.”
 
Consensus forecasts for Friday’s US employment data say 203,000 net jobs were added to non-farm payrolls this month, reversing August’s shock reading of just 142,000.
 
Thursday’s European Central Bank decision “could weaken the Euro and strengthen the Dollar,” adds Butler at Mitsubishi. “[But] the impact of this on bullion prices could be offset by safe-haven buying of physical gold.”
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Sep 15

All Eyes on US Fed as Gold Price Bears Risk "Short-Covering Rally" from Lowest Weekly Close in 36

Gold Price Comments Off on All Eyes on US Fed as Gold Price Bears Risk "Short-Covering Rally" from Lowest Weekly Close in 36
GOLD PRICES rallied $10 per ounce from a new 8-month low of $1225 hit at the start of Asian trade Monday, trading 0.5% above last week’s finish in London.
 
European stock markets held flat ahead of this week’s US Federal Reserve statement on rates and QE on Wednesday, plus the start of the Eurozone central bank’s new round of long-term bank financing on Thursday.
 
Losing 2.7% against the Dollar, gold prices ended last week with their lowest Friday PM Gold Fix in London since 27 December 2013, down at $1231 per ounce.
 
Silver on Monday held steadier than gold prices, unchanged around $18.65 per ounce to trade some 1.0% above last Thursday’s new 14-month low.
 
“With last year’s double bottom of $1180 not too far off,” says Jonathan Butler at Japanese conglomerate Mitsubishi, “attention will be on the Fed’s comments on Wednesday.”
 
“A hawkish stance” – such as the loss of the words “considerable time” from  the Fed’s forecast for its likely delay to raising interest rates from zero – “could see further strengthening of the Dollar and potentially a further gold capitulation,” says Butler.
 
“If the market view the Fed’s comments as too dovish, gold could stage a reversal.”
 
“We could see a short-lived technical bounce,” reckons Ed Meir at US brokerage INTL FCStone, but “traders will likely use any rallies as a selling opportunity.”
 
In US derivatives, “Some short covering and bargain hunting [was] seen down at the lows overnight,” says a note from brokerage Marex Spectron’s David Govett in London.
 
Latest data on US futures and options show speculative traders as a group grew their “short” betting against gold for the 4th week running in the week-ending last Tuesday, taking their “net long” gold position (of bullish minus bearish bets) to its lowest level since mid-June.
 
Speculative betting against silver prices meantime rose for the 6th week in a row, up to a level only surpassed 3 times in the last 20 years, all in early summer 2014 when the metal began a rapid 16% rally.
 
“Money managers have contributed to the fall in both gold and silver prices,” says the commodities team at Germany’s Commerzbank.
 
“Given that prices have dropped further since the reporting date, net long positions have no doubt also been reduced further.”
 
“The market remains under pressure,” Reuters quotes analyst Andrey Kryuchenkov at Russian bank VTB Capital in London, “from expectations for a stronger US currency in the longer run.
 
“Physical buyers are still absent, unwilling to support prices on fresh lows.”
 
With Tokyo closed for Japan’s national Respect for the Aged holiday, “Liquidity was already on the thin side,” says the Asian desk of Swiss refining and finance group MKS, “but once the Shanghai Gold Exchange opened up more physical interest began to trickle in – finally!”
 
Despite slipping from Friday’s close in Yuan terms, Shanghai’s main gold contract more than doubled its premium Monday to more than $5 per ounce over comparable London quotes.
 
With Scottish opinion polls meantime putting the “Yes” and “No” camps neck-and-neck for Thursday’s independence vote, the British Pound held onto last week’s bounce from new 2014 lows.
 
That cappped gold prices for UK investors at £760 per ounce, some 0.6% above Friday’s 7-week low.
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Aug 19

Gold Rises to $1,299.22 per Ounce on Fund Inflows

Gold Price Comments Off on Gold Rises to $1,299.22 per Ounce on Fund Inflows

Gold rose 0.2 percent or $2.60 to trade at $1,299.22 per ounce on Tuesday, according to Reuters.

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Aug 18

Gold Prices Lower on “Uneventful Monday,” Support from Hedge-fund Managers

Gold Price Comments Off on Gold Prices Lower on “Uneventful Monday,” Support from Hedge-fund Managers

GOLD PRICES have dipped below $1,300 this Monday afternoon. European stock markets rose following Asian gains. Analysts have referred to today as an “uneventful Monday”.

The single European currency trades Monday morning slightly lower, remaining in a tight range below $ 1.3400.

Reports of the destruction of an armed Russian convoy by Ukrainian troops on Friday pushed Brent oil up by one US dollar before coming back to trade below $103 per barrel as rumours seemed to be false, with Russia denying having crossed the border.  

Gold is expected to carry on “range trading… unless all the tensions in the world are sorted out,” says David Govett from Marex Spectron. “Gold is not the perfect safe haven … but it does knee jerk react to headlines and, as such, the downside should be limited for the time being,” he added.

In the Comex market of gold futures and options, gold’s bullish net position increased nearly 20% to 556 tonnes, the biggest jump for the last 8 weeks. The open interest gained for the first time in the last three weeks.

Silver cut the speculative net long position for the 4th week running.

Paulson & Co, the largest investor in the SPDR Gold Trust, maintained its stake in the exchange traded fund at 10.23 million shares in the three months ending June 30, as shown in US Government filings. This is the fourth consecutive quarter of unchanged holdings.

Another hedge fund giant, Soros Fund Management LLC, decreased its stake in Barrick Gold by more than 90% in the second quarter while it “nearly doubled” its ownership in the Gold Miners ETF and  initiated stakes in Allied Nevada Gold Corp, according to Reuters information.  

Axel Merk, chief investment officer of Merk Funds, considers that these actions underline that gold “has become increasingly attractive to hedge fund managers who are long-term investors as real interest rates remain negative.”

Gold closed its Monday’s trading session on the Shanghai Gold Exchange with a premium of $ 1.3 over the spot gold benchmark price in London. Reuters reports that physical demand in major buyers China and India has been weak with many consumers expecting prices to fall further. Bullion traders are expressing their worries that demand “might not pick up in the second half of the year, when it is normally stronger”.

This week’s macro data include US and UK CPIs plus the release of the FOMC minutes on Wednesday, which, according to analysts, should continue to reflect sustained improvement of the US economy, “and could give us a better idea of the Fed’s policy normalisation plan”. The Jackson Hole Symposium will start on Thursday, gathering central bankers from all around the world. This year’s title for the meeting is “Re-evaluating Labour Market Dynamics”. The US Fed Chairwoman, Janet Yellen, will speak on Friday.

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Aug 13

Gold Prices "lacklustre" but "supported" with uncertainty in Ukraine, US retail sales flat

Gold Price Comments Off on Gold Prices "lacklustre" but "supported" with uncertainty in Ukraine, US retail sales flat

SPOT GOLD PRICES remained supported above $1300 on Wednesday morning in London but rallied following the US retail sales data to almost $1315, a level first reached this week on Tuesday. Asian stock markets traded slightly higher, with Japan’s Nikkei extending its recovery from two-month low. Europe followed the lead and traded also higher, with the Dax gaining 1% ahead of tomorrow’s German GDP data.

US retail sales were flat in July, “pointing some loss of momentum in the economy”, according to Reuters. July’s reading was the lowest since January 2014.

Silver tracked gold and after dropping below the level of $20 per ounce this morning only to recover after the retail sales data release. Less than 48 hours away from the last Silver Fix, the market is impatient to know how the new London Silver Price will affect the trading.  

Brent crude fell to thirteen month low to $102.39 per barrel. In the currency markets, the Euro traded lower against the US Dollar, at $1.3352  this morning. Ukrainian Grivna fell to a record low in the country’s history amid the economic crisis and the Eastern Ukraine armed conflict.

Russian humanitarian aid convoy resumed its journey to the south of Ukraine. Uncertainty remained about how the aid would be delivered, as Russia was thought to be using the convoy as an excuse for military action in Ukraine.

“Precious metal markets were lacklustre as rising geopolitical tensions were countered with a slightly stronger USD,” says a commodity note from ANZ. Gold prices pushed above $1315 yesterday following the news that Ukraine would block a convoy of Russian trucks that carried humanitarian aid. In the evening investor appetite diminished and the EUR weakened against the USD.

“It is clear that safe haven buying is providing a base of support, rather than a fillip for a move higher,” it adds pointing out that the outlook for prices remains subdued.

Commerzbank emphasizes on its technical note that the market continues to see recovery off its 61.1% retracement at 1280. “Our outlook is bullish while above 1280… Resistance lies at 1335 ahead of the July high at 1345,” adds the German bank in Frankfurt.

Gold prices at the Shanghai Gold Exchange traded at a premium of $2 per ounce above London quotes at session closing time in China.

The Bank of England halved its forecast for average wage growth, to 1.25% this year. Following Bank’s governor Mark Carney speech on the quarterly inflation report, the Pound Sterling hit a ten-week low against the Dollar, pushing gold price in Sterling away from 4-session low to over £783.  

Gold futures on the COMEX were little changed despite geopolitical concerns yesterday. The most active gold contract for December delivery rose 10 cents, or 0.01 percent, to settle at 1,310.6 dollars per ounce.

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Aug 11

Silver vs. Gold Investing

Gold Price Comments Off on Silver vs. Gold Investing
Facts, figures, pros and cons for choosing or adding silver to gold…
 

SILVER INVESTING is often seen as merely an offshoot of the gold market, writes Adrian Ash at BullionVault.
 
If you like gold’s trajectory, or so the theory runs, you’ve got to love silver. The cheaper metal has no life of its own, simply tracking the direction of gold prices.
 
History says that’s true to some extent. But as this price chart shows, silver has twice outpaced gold many times over, first during the 1970s and then again in this early 21st century bull market.
Gold and silver prices compared, 1968-2014, daily fixes
 
With silver moving less quickly in 2014 so far, but with faster swings in between, this month also brings a new process for the world’s daily benchmark price – replacing the 117-year old London Silver Fixing. Silver is therefore making headlines of its own, and many people investing in gold today wonder whether they should include silver, switch into the cheaper metal, or leave it out of the holdings entirely.
 
BullionVault can’t advise you on which metal will prove a better investment long term. If we knew, we wouldn’t offer or invest in both ourselves. But the notes below, we hope, should help inform your own research and choice in weighing up silver versus gold investing.
 
Correlation
No other tradable asset prices move as closely with each other as silver and gold. They’ve moved in opposite directions on fewer than 25% of all trading days since 1968, and only once split direction 7 days running. The average 1-month rolling correlation – a measure of how closely two things move together – is 0.63, a “statistically significant” link.
 
Volatility
Being much smaller than the gold market (one-tenth the size in London’s wholesale dealing, and one-fifth the size in Comex futures), silver moves much faster when money comes in or out. For every 1% move in gold – up or down – silver moves 3% on average. That’s why some London dealers call it “the devil’s metal”. Silver prices can move very fast – up or down – and hit short-term traders very hard, especially if they’re using derivatives (futures, options, spreadbetting) to get leverage. Still, silver’s extra spice, relative both to gold investing and mainstream asset price moves, has drawn a lot of “hot money” traders already in 2014. That trend looks set to continue as hedge funds and other speculators seek a fast return.
 
Physical use
Unlike gold, physical silver is primarily an industrial metal today. Indeed, US industry and lobby group the Silver Institute calls it “the indispensable metal”, but that makes it vulnerable to the economic cycle. Silver use is rising worldwide, with demand growing by one fifth over the last decade. Investing played a big part in that. But the metal’s greatest use for modern society comes from industry, and most especially because it is the most conductive element to heat and electricity. New and exciting uses continue to be developed, but as a key input into many fast-growing technologies, silver is also subject to “thrifting”, where manufacturers work to reduce the amount of silver needed per unit. This has happened most dramatically in photo-voltaics, where the quantity of silver used to gather and conduct electrical energy in a solar panel has been reduced by up to 80% in some applications since the big price spike of 2011. Demand-led price rises, in short, can prove their own cure.
 
Gold/silver ratio
Some people trading precious metals today like to follow the gold/silver ratio. This simply measures how many ounces of silver you could buy with one ounce of gold. So at a silver price of $20 and gold $1300, the ratio would stand at 65. Historically, the ratio has gone from as low as 12 in medieval Europe, to 15.5 times during Great Britain’s 18th century Sterling standard, and then as high as 100 during WWII and then the late 1980s as this chart of the Gold/Silver Ratio shows:
Gold / Silver Ratio, 1968-2014 at daily Fix prices (transaction costs not included)
 
Trading between gold and silver, some BullionVault users – as well as other investors – hope to grow their long-term holdings of precious metals. They sell what they think the gold/silver ratio says is expensive, and buy the other metal, before switching back as the ratio changes. This can of course prove risky in cash terms, because even if you get the ratio trade right, you would lose monetary value if both metals fell in price.
 
Gold vs. silver trading costs
There are also dealing costs to consider. Swapping between physical gold and silver investment on BullionVault is cheaper than any comparable service we know. But you’ll still incur two dealing fees of 0.5% maximum each side, plus the dealing spread (between buying and selling prices) if you accept the current best price to transact quickly. Alternatively, there’s price risk inbetween completing both sides of the trade if you set your own quote, and wait for another user to accept your price.
 
Because physical silver is so much larger than gold for the same dollar-value, storage fees for silver are also higher. (See Bullionvault’s full tariff here.) North American and especially European investors must also consider sales tax. Because unlike gold, silver is deemed an industrial metal for VAT purposes. So small bars and silver coins bought for your personal possession add 20% to the cost of silver investing in the UK, for instance – a tax you can escape buying Good Delivery metal inside secure, specialist London vaults using BullionVault. But choose to take that metal into your possession, and you’ll trigger that 20% tax as well as losing direct access to the deep liquidity of the professional wholesale market.
 
End of the Silver Fix
It’s unclear how the end of the London Silver Fix, and the start of the new daily London Silver Price, may affect pricing from mid-August. Most likely there will be no impact on the underlying trend, but this midday event does represent the deepest single moment of liquidity in the trading day. So acceptance (or rejection) by the largest buyers and sellers (think industrial users and miners) should be reflected in how the new output prices stand relative to other “spot” and futures contracts prices.
 
The current process has been used for almost 120 years. That proves its value, we think, rather than automatically qualifying it for the scrapheap. However, a separate administrator, plus auditable order trails from the major participants, should reassure regulators and key users of the London market that the new process is transparent and reliable. If so, it may reduce volatility around the midday event. But another theory says that, with traders scared to share information or deal at the Fix anyway, the current “scandal” has reduced daily movement in prices. So fresh confidence, and trading volumes, might help volatility in silver prices recover further from their recent pre-financial crisis lows.
 
Also note that the Gold Fix is likely going the same way, with the member banks of that process inviting proposals similar to the new CME/Reuters joint bid which succeeded in replacing the Silver Fix.
 
Bottom line?
Most common of the noble metals, resistant to corrosion and oxidation, silver also has the highest electrical and thermal conductivity of any element. So where it has been used to store wealth for 5,000 years, and was the foundation of most coined money systems before the mid-19th century, silver today finds 65% of its end-user demand from productive applications. That’s why the depressionary collapse of late 2008 saw Dollar prices fall nearly 60%, whilst gold fell only 30% before turning sharply higher as the ultimate – and comparatively “useless” to industry – store of value.
 
But silver had already risen 5 times over during the half-decade before the financial crisis began, and it then shot another 5 times higher again to peak in spring 2011 near $50 per ounce – the all-time high hit in 1980 when Texan oil barons the Hunt brothers famously tried to corner the market, hoarding silver as a hedge against the strong inflation then destroying bond and stock investments.
 
Today’s long-term silver investors seem happy to build their positions, awaiting a similar surge sometime in the future. It might arrive sooner than later if hot-money action in the derivatives market keeps growing like it has in 2014 so far.
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Aug 04

Gold Prices "Rangebound" as Global Unrest Trumped by "Improving US Data & Rate Rises"

Gold Price Comments Off on Gold Prices "Rangebound" as Global Unrest Trumped by "Improving US Data & Rate Rises"
GOLD PRICES moved in a $5 per ounce range Monday morning in London, holding below $1295 as world stock markets rallied from last week’s drop.
 
With political leaders and royalty from Western Europe today marking the centenary of the First World War, Russia’s defence ministry said its airforce is holding military exercises near the Ukraine border.
 
Israel offered a 7-hour ceasefire to militants in Gaza as a “humanitarian window”.
 
Silver meantime bucked the slight fall in gold prices, edging 0.2% higher after failing to rally with on Friday following much weaker-than-forecast US jobs data.
 
“One slightly negative figure does not a bull market make for gold,” says David Govett at brokers Marex Spectron in London.
 
With gold prices still below the “psychologically” important $1300 level, “Unless there is further serious unrest in any of the trouble spots in the world…we remain pretty much rangebound.”
 
Bandits from the self-proclaimed Islamic State yesterday seized two small towns in Iraq’s northern Kurdish region.
 
Gunmen linked to the same al Qaeda offshoot also traded fire with Lebanese soldiers near the border town of Arsal, Reuters reports.
 
“Good economic data,” reckons Commerzbank’s commodities team in Frankfurt, “are likely to put the subject of interest rate hikes back on the Fed’s agenda. That should reduce the relative attractiveness of gold and silver and preclude any sharp rises in price.”
 
“With the US economy picking up steam,” agrees Edward Meir for US brokerage INTL FCStone, “investors will have to start discounting higher rates down the road [because] the Fed is running out of wiggle room.”
 
Together with that risk of rising rates, Meir concludes, “sluggish investor and jewelry demand does not make the upside case for gold particularly persuasive…Even Chinese intake [is] now flagging.”
 
After new Hong Kong data last week showed a marked drop in gold exports to China’s mainland for June, down to a 17-month low, “a slide in Chinese demand will take away a key supporting factor for gold prices,” says David Levenstein in South Africa for the Rand Refinery, “[which are] already pressured by an improving global economy and US stimulus withdrawal.”
 
Speculative traders in US futures and options last week cut their overall bullish position in gold – net of bearish bets – by 9% from the previous week to a notional 512 tonnes of gold bullion, new data from US regulator the CFTC showed after Friday’s close.
 
Overall, the total number of gold futures and options contracts now open fell at the fastest pace since November to hit a 5-year low.
 
But with the world’s largest gold ETF – the SPDR Gold Trust (NYSEArca:GLD) – adding 11 tonnes to its holdings last month to 801 tonnes, exchange-traded gold notes as a whole rose 15.7 tonnes in July, “the first monthly net inflows since March and the largest since November 2012,” according to one bank analyst.
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Jul 30

Gold Flat at $1,298.30 per Ounce Ahead of Data from United States

Gold Price Comments Off on Gold Flat at $1,298.30 per Ounce Ahead of Data from United States

Gold traded flat at $1,298.30 per ounce on Wednesday, according to Reuters, after dipping below $1,300 in yesterday’s session.

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Jul 25

Gold Price "Can’t Rise" as Weak Asian Demand, Technical "Correction" Take Out 50- and 100-Day Moving Average

Gold Price Comments Off on Gold Price "Can’t Rise" as Weak Asian Demand, Technical "Correction" Take Out 50- and 100-Day Moving Average
GOLD PRICES headed for their lowest Friday close in 6 weeks in London today, trading sideways at $1295 per ounce as European stock markets failed to follow Asian equities sharply higher on the day.
 
With Shanghai’s stock market closing the week 2.9% higher, Shanghai gold prices ended 1.5% down at the lowest since 19 June.
 
India’s Gems & Jewellery Export Promotion Council said gold bar imports to the world’s former No.1 consumer nation doubled last month from the same month in 2013.
 
But in what Reuters calls “a seasonally slack period”, improved supplies have seen Indian premiums over London gold prices halve this week, falling as low as $5 per ounce vs. late 2013’s record level of $160 when the current import curbs first hit.
 
“In our opinion,” say analysts at Commerzbank in Frankfurt, “the weak gold demand figures out of Asia – not only China – preclude any rise in gold prices.”
 
“Positive economic data put a dampener on the gold market,” reckons an Asian trading desk quoted by Reuters, “as risk assets caught a bid and safe-haven buying dried up.”
 
“It will be political events that provide the market with some potential direction,” says a Singapore dealing note after warning yesterday morning that gold and silver “look[ed vulnerable to a correction lower.”
 
Islamic State fighters seeking a medieval caliphate today claimed they’d over-run a Syrian army base.
 
The Gaza death-toll from the last fortnight’s conflict with Israel was today put above 800.
 
Moscow’s stock market meantime fell hard as Dutch and Australian police reached the crash site of Malaysian flight MH17 in eastern Ukraine, dropping 2.1% for the week – but holding well above this spring’s 4-year lows – after the Russian central bank surprised FX traders with a half-point hike on interest rates.
 
Now at 8.0%, Russia’s key overnight rate is only just ahead of Russia’s latest inflation reading.
 
The Ruble rallied against the Dollar, but the British Pound fell to 1-month lows as UK GDP data met analyst forecasts for 3.1% annual growth.
 
That buoyed the gold price in Sterling at £762 per ounce, down 0.7% on the week.
 
“Gold plunged Thursday,” says London market maker Scotia Mocatta’s New York desk in its daily note, “falling below both the 100-day and 50-day moving averages.”
 
What Scotia’s analysts call “bearish trend and momentum indicators” are now “providing for ample room to the downside.”
 
“The current correction should fetch 1285/81, mid-June highs,” says technical analysis from Societe Generale, after the metal “failed to establish itself” at late-June’s return to April’s high of $1331.
 
Gold prices, the SocGen note concludes, will now need “a break above [July’s] steep resistance line” coming down from the peak at $1345 and now sitting at $1300 “to prompt positive signals.”
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