Gold
rallied back above $1420 per ounce Tuesday morning in London, having earlier
dipped back towards where they started the week following yesterday's 2% jump
amid what one Hong Kong dealer suggested was the biggest rush to buy
gold in half a century.
Silver
meantime climbed back above $23 an ounce by lunchtime after it too fell in
early trading, though unlike gold it was down slightly on the week so far.
European
stock markets ticked higher in spite of earlier losses in Asia and
disappointing purchasing managers' index data, while commodities fell and US
Treasuries gained.
On the
currency markets the Euro fell to a two-week low against the Dollar, while
Euro gold prices were trading just below €1100 an ounce by lunchtime, the
level breached briefly yesterday for the first time since last week's price
drop.
The
world's largest gold exchange traded fund SPDR Gold Trust (ticker: GLD)
continued to see net outflows Monday, with his holdings ending the day down
more than 18 tonnes at 1104.7 tonnes. Since the start of 2013, the volume of
gold held to back GLD shares has dropped nearly 20%.
In
China by contrast, "physical gold dealers and jewelry makers have had to
replenish their inventory following robust sales," according to Song
Heping, assistant manager at Xiamen City Commercial Bank.
On the
Shanghai Gold Exchange, the equivalent of 40.6 tonnes was traded in the
benchmark 'four nines' spot contract (for gold of 99.99% purity) Tuesday, down
a little from yesterday's record of 43.6 tonnes. By comparison, the previous
record, set on February 18 this year immediately after the week-long Lunar
New Year holiday, was 22 tonnes.
"Physical
markets have responded to the much cheaper gold price levels," says UBS
precious metals analyst Joni Teves.
"Our
physical flows to Asia have been particularly elevated this week."
"In
terms of volume, I haven't seen this gold rush for over 20 years," says
Haywood Cheung, president of the Hong Kong Gold & Silver Exchange
Society, quoted by the Financial Times.
"Older
members who have been in the business for 50 years haven't seen such a
thing."
Dealers
in Hong Kong Tuesday reported gold bars selling at premiums over the spot
price not seen for eighteen months, citing supply constraints for physical
bullion.
Growth
in China's manufacturing sector meantime has slowed this month, according to
the provisional HSBC purchasing managers' index published Tuesday, which also
reported falls in new export orders and employment.
Over in
Europe, German manufacturing PMI has fallen further below 50, the threshold
between conditions seen as improving or getting worse, provisional data
published this morning show, while German services PMI fell from 50.9 to
49.2.
For the
Eurozone as a whole, manufacturing PMI fell from 46.8 to 46.5, provisional
figures show. Eurozone government debt-to-GDP rose to 90.6% in 2012, up from
87.3% the previous year, figures published Monday show.
The
policy of cutting budget deficits being implemented by many European governments,
known as austerity, "is fundamentally right [but] has reached its limits
in many aspects," Jose Manuel Barroso, president of the European
Commission, said yesterday.
"A
policy to be successful not only has to be properly designed. It has to have
the minimum of political and social support."
In the
UK meantime, public sector net borrowing for the fiscal year ended March fell
to £120.6 billion, a drop of 0.2% from the previous year. First quarter UK
GDP figures are due to be published Thursday.
