GOFO – Gofo contango deepens, one-year at 2014 high

Aug 31, 2014 - 1:30 PM GMT
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This is a delayed version of the report that appeared on FastMarkets’ subscriber-only website on August 27th 2014 – all information is correct as of that date. For access to FastMarkets’ exclusive premium content, please click here to request a free trial.

Gold for forward delivery pushed deeper into contago territory than at any point so far this month on Wednesday.

This comes despite a stagnation in spot prices, which has seen the yellow metal trade just above the 200-day moving average at $1,285.10/1,285.90 per ounce, up $5.10 on the close.

One-month contango shot higher, climbing from 0.065 percent a week ago to 0.092 percent today. On Friday, it had hit a high of This is the highest level it has been since July 29. Two-month gold, also rallied sharply. It climbed from 0.0825 percent above spot last Wednesday to a high of 0.1125 percent on Friday. But by Wednesday, it had lowered somewhat to 0.104 percent above spot.

This pattern was repeated across the rest of the curve. Three-month gold climbed from 0.1 percent last Wednesday to 0.13 percent on Friday then declined to 0.122 percent today and six month went from 0.135 percent last week to 1.5 percent on Friday and fell to 0.144 percent today.

The only exception is one-year gold, which climbed from 0.205 percent a week ago to 0.215 percent on Friday and to 0.226 today. One year gold is now at its steepest contango so far this year.

The market-making members of the LBMA – the Bank of Nova Scotia-ScotiaMocatta, Barclays Bank Plc, HSBC Bank USA London Branch, Goldman Sachs, JP Morgan Chase Bank, Société Générale and UBS AG – set the GOFO rate.

Every day at 10:30 UK time, these contributors register the rates at which they are prepared to lend or swap gold against US dollars. Quotes are made over one, two, three, six and 12 months.

The highest and lowest quotes for each period are discarded and the remaining rates are averaged.

(Editing by Martin Hayes)