GOLD PRICES touched 1-week highs of $1145 per ounce Tuesday as world stock markets fell sharply again and New York's Dow Jones index dropped almost 400 points at the open.
Gaining1.0% from last weekend, wholesale gold bullion for London delivery found a clearing price on solid volume of $1141.90 per ounce at Tuesday morning's LBMA Gold Price auction.
That was a five-year low when first reached in mid-July.
China's stock market meantime closed Tuesday 1.6% lower after new data showed manufacturing activity in the world's second largest economy shrinking at the fastest pace since 2012.
Western equities fell harder, dragging Eurozone markets well over 2% down as crude oil slumped more than 4%, and major government bond prices rose, pushing market interest rates down.
Shares in global hedge-fund managers Man Group (LON:EMG) dropped 5.8% – more than twice the London FTSE's broader drop – amid reports that its Chinese division's chairwoman, Yi Lifei, has been detained by Chinese police investigating insider trading and "false information" causing "panic and disorder" during last week's dramatic drop in Shanghai's stock market.
After cutting interest rates and pumping $200 billion into the stock market since it began crashing 40% from June's 7-year peak, Beijing today urging listed companies to issue cash dividends, go on a mergers & acquisition spree, and buy back their own shares in a bid "to push forward reforms of State-owned enterprises and promote the steady and healthy development of the capital market," according to official newspaper China Daily.
Shanghai gold premiums, over and above comparable London quotes, eased back on quieter volumes, but held near $3 per ounce after turning negative amid last week's 'Black Monday' equity turmoil for the first time since early July.
"Only a definite move above $1163/1173 will mean further recovery," says Stephanie Aymes, head of technical analysis at French investment bank and bullion market-maker Societe Generale, pointing to the gold price's "multi-month descending trend."
"Our view," says Tom Kendall at Chinese-owned ICBC Standard Bank in London, "remains that...another test of the resistance area around $1162/65 is likely.
"The prospects of a September US rate rise are close to zero, and...[bearish traders] continue to cover in the run up to the FOMC meeting."
Latest data from US regulators the CFTC show hedge fund and other speculative traders retreating for the fifth week running from end-July's record large bearish betting against gold prices.
The single Euro currency ticked higher against the Dollar on Tuesday, but held almost 5 cents below last week's sudden 2015 high above $1.17 – a peak swiftly lost as US Fed policymakers told the annual Jackson Hole central bankers' conference that they intend to push ahead with raising interest rates from zero despite the stockmarket turmoil.
The Fed's first rate rise since 2006 "is now looking more likely in December than September," Bloomberg quotes economist Vyanne Lai at National Australia Bank Ltd. in Melbourne today.
"[So] gold prices may follow a gentler declining trend than previously expected, but the market remains entrenched in a bearish cycle."
But "given the mounting problems" in equity markets, counters Singapore brokerage Phillip Futures, "it is unlikely that gold may dip drastically in the near term.
"The momentum right now is for gold to rally more than to fall."
In the second fortnight of August, the import tariff value on gold was $363 per 10 grams and on silver it was $499 per kg.
American Eagle gold coin sales fell by 40% from a month earlier to 101,500 ounces in August, but that was still four times the sales in August 2014.
GOLD PRICES traded at $1128.37 per ounce on Friday midday in London, showing a weekly drop after 3 weeks of gains as Asian shares rallied on “upbeat” U.S. economic growth data following a chaotic week starting with the Chinese Black Monday.
The American, Chinese and Japanese main stock markets closed up while European equities dropped, erasing weekly gains on Friday morning.
The US Dollar versus the Euro rose slightly to $1.12760 from Thursday despite a weekly fall, which halved a previous one-week hike.
The 10-year US Treasury bond yields reached 2.15% Friday following an early week level under 2%, an almost 4-month low.
The crude oil US contracts rose to a 2-week high at $42.87 per barrel and Brent also showed a weekly hike.
The so-called Black Monday in China created a shockwave across global markets denting investors’ confidence. The plunge didn’t last as the benchmarks Shanghai Composite and Shenzhen Composite closed up 4.8% and 5.4% respectively on Friday. Chinese equities still ended the week almost 8% lower.
Positive economic data from the US, with better than expected GDP figures released on Thursday, calmed sentiment as Asian markets saw a second day of rally on Friday.
Gold Prices fell during the whole week after Black Monday and the ensuing chaos in the Asian and Western stocks markets to reach a one-week low at $1118.17 per ounce on Wednesday. Prices were almost 1.16% up Friday morning from this low but overall on the week were down $29. This weekly 2.5% drop was the fastest since week commencing July 20th.
“We think [gold] prices will likely head lower over the next few days,” said Edward Meir from INTL FCStone in a note on Friday, “since gold is not only selling off on bearish news, but more importantly, it does not seem to be pushing higher on bullish news,” such as when stocks plunge.
“The notion that gold always rises when the equity market falls is false,” said Charlie Bilello, the director of research at Pension Partners LLC, managing $200 million.
New data showed that the U.S. economy expanded at a rate of 3.7% in Q2. The upward revision of the data prompted expectations of a rate rise happening this year despite the market turmoil. Investors were considering the sustainability of the US growth and interest rate hike by the Fed in September.
“A huge portion of this increase in U.S. GDP numbers came from a build up in inventories,” told an analyst at Phillip Futures Pte in Singapore, “which probably explains why gold prices managed to hold.”
Holding above the $1100 mark suggests “the market is pricing in the probability that the September rate hike won’t materialize,” added the analyst, concluding that the hike could happen in December.
The precious metals consultancy Metals Focus said in a note published on Tuesday that it saw a Chinese hard landing avoided and Fed rate hike still possible late in the year.
“Once the market shifts attention back to the Fed, downward pressure is projected to build on the yellow metal again in the final third of the year,” added Metals Focus
The bottom of the market is in sight and investor sentiment [towards Gold] should recover in 2016, concluded the consultancy group.
The fall in gold prices from a 7-week high failed to spur physical demand in Asia. The Chinese premium above the London international prices for gold main contracts in Shanghai stabilised around $3.5 per ounce since Wednesday.
“There's not much interest on the physical side,” Ronald Leung, a Chief Dealer at Lee Cheong Gold Dealers Ltd in Hong Kong, told Reuters. “The Chinese are still concentrating on the stock market rather than the gold market.”
Meanwhile this week, the Chinese authorities were investigating four securities brokerages as well as employees at its securities regulator, according to the official Xinhua News Agency reported Time.com. A former chairman at China’s largest investment bank CITIC Securities was also being detained.
Over in Europe, EU antitrust regulators were investigating alleged anti-competitive behaviour in precious metals spot trading. National regulators in Germany (Bafin), the UK (FCA) and in Switzerland (FINMA) were also looking into precious metals trading and commodity benchmarks, revealed Reuters.
Silver traded at $14.46 Friday midday extending the gold price drop and seemed set to finish the week about 5.6% down. Silver prices drifted lower this week to touch $14.00 on Wednesday, a low level not reached since the summer of 2009.
Azerbaijan produced a total of 2,111.8 kilograms of precious metals last year, including 1,872.5 kilograms of gold and 239.3 kilograms of silver.
GOLD PRICES held steady against the US Dollar on Monday morning in London, as China's stock market reversed earlier losses but Eurozone equities erased opening gains.
Gold priced in the Euro edged 0.5% higher as the single currency ticked lower on the FX market, but continued to hold stronger against the Yuan from last week's 'devaluation' by Beijing.
After the LBMA Gold Price – the world's benchmark daily price – saw heavy volume set the highest weekly finish since mid-July on Friday at $1118.25 per ounce, interest eased Monday morning with the AM auction 'fixing' one Dollar lower in London.
Silver prices held firm above last week's finish, but traded 2% below Friday's spike to 1-month highs at $15.62 per ounce.
"Only by involving Chinese financial institutions in the global gold fix mechanism," says Beijng-approved news-site China Daily, quoting Roland Wang at market-development organization the World Gold Council, "and by advancing [Yuan-denominated contracts] can China increase its gold price-fixing power accordingly."
Further liberalization of China's domestic gold exchanges will see the world's largest mining and consumer nation "taking its place" in the world market, says Wang.
Trading in Shanghai's 'international' gold contract expanded on Monday, but volumes stayed at one-seventh their average size since launching 12 months ago, having spiked and then fallen to zero between spring and summer 2015.
A report from the World Gold Council last year said "as much as 1,000 tonnes of gold may have been used for financing deals in China," notes Reuters columnist Clyde Russell today.
"If this gold is released back into the market, it will cut the need for imports into China, which would be bearish for gold prices."
Shanghai gold prices held steady against the Yuan on Monday, edging their premium above London prices – effectively the incentive offered to importers – up to $2.60 per ounce, some 25% above the last 12 months' average, as the Chinese currency crept higher again on the FX market.
Recovering one-third of last week's sharp drop against the Dollar, sparked by the People's Bank changing its FX policy from a fixed exchange rate to market prices, the Yuan still held almost 5% weaker against the Euro.
"Make no mistake," writes Societe Generale strategist Albert Edwards, "this is the start of something big, something ugly.
"The West has been heaving a sigh of relief over the past few months that deflation pressures have abated somewhat...[But] deflation has only been intensifying in Asia and China [has been] forced by economic reality to participate in competitive devaluation."
US crude oil contracts today hit new 6-year lows beneath $42 per barrel, while US Treasury yields fell back towards last week's 2-month lows at 2.18% on the 10-year bond.
After the Athens parliament on Friday approved 'austerity' measures for Greece to get a third bail-out from its Eurozone partners, German chancellor Angela Merkel said Sunday she expects the International Monetary Fund "to take part" in financing the deal.
The IMF "knew" in April that Greece was effectively bankrupt, and needed some of its debt written off, claims ex-finance minister Yanis Varoufakis on his blog, also pointing to a New York Times report.