WHOLESALE BULLION prices to buy gold recovered an early dip in
London on Wednesday morning, rising back to $1750 per ounce as European stock
markets also rose and the single currency hit its best level in more than a
month.
The
rising Euro knocked the price for French, German and Italian investors to buy
gold back to a 6-week low of €1333 per ounce (€42,860 per kilo).
That's
some 4% below Euro-gold's new all-time high of 1st Oct.
"I
have been speaking to a number of Gold Dealers this week," says Swiss
refinery and finance group MKS's senior trader in Sydney Alex Thorndike,
"and the majority still feel their will be
significant support on any extended pullback towards $1675-1700.
"Most,
myself included, think long-term macro investment buying and possibly even
central bank demand would be seen at these levels, as well as a resurgence in physical interest from India –
especially if the Rupee remains strong."
Commodities
were broadly flat meantime on Wednesday, but so-called "safe haven"
government bond prices ticked lower as Spanish debt rose on expectations of a
formal bail-out request.
The
Moodys rating agency last night confirmed Spain's
ranking above "junk" status.
Madrid's
10-year bond yields today eased to their lowest spread above comparable
German debt in 6 months.
"Gold
and the precious complex have been held afloat overnight and this morning by
a stronger Euro," says UBS strategist Edel
Tully in a note.
"Gold's
ability to stay buoyed today will be dependent on foreign exchange moves and
risk appetite."
Silver
prices today extended to 1.8% their rally from Monday's 6-week low for Dollar
investors, recovering the $33 mark as the London Silver Fix approached at
midday.
The
first drop in solar-panel silver demand for 12 years will likely dent 2013's
average silver price by more than 4%, according to New York-based consultancy
the CPM Group.
"China's
near-term appetite for gold appears to be waning as bullion imports from Hong
Kong slow," write analysts at London market-maker HSBC in a note.
Shipments
of gold bullion to China from Hong Kong – the major route for imports
to buy gold – slipped nearly 30% in August from July, according to
latest data from the Census & Statistics Department.
"What
we are hearing from our customers is that they were buying gold rapidly over
the last couple of years," MarketWatch quotes
Scotia Mocatta's managing director in Hong Kong,
Sunil Kashyap, today. "But they would now see
some of their stocks sold off before they rebuild their inventories."
In
base metals, "China destocking [in iron] has run its course," says
Bloomberg this morning, quoting mining giant BHP Billiton's CEO Marius Kloppers, who believes that stocks of iron ore have now
been depleted to provide a "base level" of demand.
But
with China responsible for 40% of global money-supply growth since 2007,
"and money-supply growth in the developed world still flat on its back,
a slowdown in China augurs for lower inflation – perhaps deflation
– and higher real rates," says strategist Russell Napier at CLSA,
Asia's largest independent brokerage.
Higher
returns to cash and bonds, after allowing for inflation, would likely dent
prices to buy gold, Napier tells MarketWatch.
"Nominal
rates [are already] close to zero," he says. So sub-zero inflation would
be "bad for gold."
Over
on the supply side Wednesday, South African miner Gold Fields said its
ultimatum to striking workers at the Beatrix project – threatening
summary dismissal – today saw 6,200 illegal strikers return to work.
With
up to 50% of South Africa's gold output now closed by wildcat action, Harmony
Gold said overnight it may still implement a failed wage offer made jointly
with Gold Fields and AngloGold – the world's fifth and fourth largest
gold mining companies respectively.
World
No.2 gold producer Newmont today reported a 6% drop in third-quarter
earnings, with a record $77 million bill for maintenance and restructuring at
its operations.
Adrian Ash
BullionVault
Gold price chart, no delay | Buy gold online at live prices
Adrian Ash is head
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