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The price to buy gold fell hard on London's wholesale market at the
start of trade Thursday, dipping near to a 2012 low beneath $1,634 per ounce
as world stock markets and commodity prices also dropped.
Silver
prices also fell more than 1%, touching their lowest level
against the US dollar since Jan. 25th at $31.70 per ounce.
A raft of worse-than-expected European data was preceded by news of
China's weakest manufacturing activity since November. Output has now
contracted for five months running on the PMI index of purchasing managers'
activity.
"Shrinking manufacturing activity in March signals slower demand for
resources," says a column at BreakingViews.
"Strong imports have heightened the risk of overstocking in precious
metals."
A surge in China's gold imports
during late 2011 was followed by sharp falls in December and January,
even as the Chinese New Year – a peak season for consumers to buy gold – drew near.
Market-development organization the World Gold Council said earlier this
month that retailers in Beijing and Shanghai reported "fantastic"
sales over the
Lunar New Year, "completely
clear[ing] out the inventory they had built
up."
This morning "A lot of people are on the sidelines [in precious
metals] at the moment," said Bruce Ikemizu,
head of commodities in Tokyo for Standard Bank, quoted by Reuters.
"We saw some bearish signs, but the market seems to be holding well.
The upside at $1,800 is still looking quite heavy, and investors are waiting
for a cue" to buy gold.
"We feel that gold is consolidating and remains vulnerable to the
next leg lower," said Russell Browne at bullion-bank Scotia Mocatta in New York after Wednesday's close.
"Silver also continues to consolidate...[in]
a daily downtrend providing near-term resistance around $32.60."
"[Silver] now trades within a downtrend channel and is expected to
slide further still," says the latest technical analysis from Axel
Rudolph at Commerzbank, forecasting "a decline to below the $26.36
January, September and December 2011 lows within the months ahead."
The Gold/Silver Ratio of the two precious metals' prices yesterday hit a
one-month high at 51.6. The ratio rises when gold outperforms silver, and
vice versa.
Last April the Gold/Silver Ratio hit a 32-year low, with 1 ounce of gold
equal to only 30 ounces of silver. It peaked near 85 in the aftermath of
Lehman Bros. collapse in late 2008.
Early Thursday, "Speculation of reduced demand for raw materials
from China has continued to weigh on risk sentiment," says Swiss
refinery and finance group MKS in a note.
"People are concerned about China's economic growth," Reuters
quotes a Hong Kong bullion dealer.
"If growth slows down and inflation eases, people may choose not to buy gold."
European economic data also pointed lower on
Thursday, with Germany's manufacturing PMI contracting faster than analysts
forecast and Eurozone industrial orders dropping 3.3% in January from a year
earlier.
UK retail sales also missed analyst forecast,
shrinking 0.3% in February from the month before.
Brent crude oil prices meantime fell 1% Thursday
morning to $122 per barrel after French industry minister Eric Besson told journalists that France and other major
governments are "studying" a joint release of emergency stockpiles
to ease prices lower.
Some 85% of US adults think Congress and
President Obama "should take immediate actions to try to control the
rising price of gas," a Gallup poll said earlier in March.
In both euro and sterling terms, Brent crude last
week hit fresh all-time highs, rising 3% above the previous peak – hit
just before the global financial crisis accelerated with the collapse of
Lehman Bros. – of July 2008.
"We can reel off a whole load of airlines
that are teetering on the brink or are really gone," said Tim Clark,
president of Emirates Airlines in Dubai, the world's biggest international
carrier, to Bloomberg on Wednesday.
Pointing to record oil prices and a slump in
demand, "Roll this forward to Christmas, and we're going to see [the
airline] industry in serious trouble," says Clark.
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