Gold prices fell below last Friday’s 6-week closing high in London trade Thursday, slipping to $1232 per ounce as US bond yields rose and commodity prices fell yet again.
Manufacturing PMI data from China and Europe beat analyst forecasts but world stock markets held flat overall.
Silver prices fell faster than gold , nearing 2-week lows at $17.05 and driving down to the cheapest level in terms of gold since July 2009.
Hitting just 33 ounces of silver per 1 ounce of gold when silver prices peaked in spring 2011, the Gold/Silver Ratio fell to 85 during the Lehmans Crash of late 2008.
Today it touched 72.4 ounced of silver per 1 ounce of gold.
“The general US Dollar strength and strong equities [are] translating into pressure for gold,” says a note from Swiss refiner MKS’s traders.
“Flow-wise…Chinese demand [has been] drying up at these higher levels and Indian demand is likely to curtail following Diwali.”
The 5-day Hindu “festival of lights” beginning Tuesday with Dhanteras has so far seen gold demand “match last year” the Economic Times of India quotes Suresh Jain, director of manufacturer and wholesaler Royal Chains in Mumbai, who yesterday became president of trade body the Indian Bullion & Jewellers Association (IBJA).
“Feedback trickling in from jewellers and bullion dealers across the country,” says Jain, “suggests that sale of coins and jewellery was more or less in line with Dhanteras 2013.”
Chinese gold prices meantime held level with London quotes at the end of Shanghai trade Thursday, lacking any sizeable premium for the 3rd day running but missing the $10 drop per ounce which then followed in global trade.
Activity in China’s manufacturing sector has risen slightly, according to HSBC’s Purchasing Managers Index, released overnight.
France ‘s manufacturing and services sectors are both slowing however, Markit’s PMI release said today.
Hoping to boost business lending in the Eurozone, commercial bank debt now being bought by the European Central Bank “could amount to between €1 billion and €2bn” this week, says French bank BNP Paribas’ senior covered bonds strategist Heiko Langer to Bloomberg.
“Eventually, real interest rates are likely to rise,” said Ben Broadbent, deputy governor of the Bank of England in a speech today, “[but] are likely to stay low for some time yet.”
Previously setting a low of 2.0% during its 300-year history, the Bank has now kept UK rates at all-time lows of 0.5% for more than half-a-decade.
“Will these morons ever learn?” asks French bank Societe Generale’s strategist Albert Edwards today.
“The central banks for all their huffing and puffing cannot eliminate the business cycle. They should have realised after the 2008 Great Recession that the longer they suppress volatility, both economic and market, the greater the subsequent crash.”
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