Best of the Week
Most Popular
1.The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - Doug_Wakefieldth
2.Tesco Meltdown Debt Default Risk Could Trigger a Financial Crisis in Early 2015 - Nadeem_Walayat
3.The Trend Every Nation on Earth Is Pouring Money Into - Keith Fitz-Gerald
4.Do Tumbling Buybacks Signal Another Stock Market Crash? - 26Mike_Whitney
5.Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - Nadeem_Walayat
6.Gold And Silver Price - Respect The Trend But Prepare For A Reversal - Michael_Noonan
7.U.S. Economy Faltering Momentum, Debt and Asset Bubbles - Lacy Hunt
8.Bullish Silver Stealth Buying - Zeal_LLC
9.Euro, USD, Gold and Stocks According to Chartology - Rambus_Chartology
10.Evidence of Another Even More Sweeping U.S. Housing Market Bust Already Starting to Appear - EWI
Last 5 days
More Downside Ahead for Gold and Silver - 31st Oct 14
QE Is Dead, Now You Tell Me What You Know - 31st Oct 14
Welcome to the World of Volatility - 31st Oct 14
Stocks Bear Market Crash Towards New All Time Highs as QE3 End Awaits QE4 Start - 31st Oct 14
US Mortgages, Risky Bisiness "Easy Money" - 30th Oct 14
Gold, Silver and Currency Wars - 30th Oct 14
How to Recognize a Stock Market “Bear Raid” on Wall Street - 30th Oct 14
U.S. Midterm Elections: Would a Republican Win Be Bullish for the Stock Market? - 30th Oct 14
Stock Market S&P Index MAP Wave Analysis Forecast - 30th Oct 14
Gold Price Declines Once Again As Expected - 30th Oct 14
Depression and the Economy of a Country - 30th Oct 14
Fed Ends QE? Greenspan Says Gold “Measurably” “Higher” In 5 Years - 30th Oct 14
Apocalypse Now Or Nirvana Next Week? - 30th Oct 14
Understanding Gold's Massive Impact on Fed Maneuvering - 30th Oct 14
Europe: Building a Banking Union - 30th Oct 14
The Colder War: How the Global Energy Trade Slipped From America's Grasp - 30th Oct 14
Don't Get Ruined by These 10 Popular Investment Myths (Part VIII) - 29th Oct 14
Flock of Black Swans Points to Imminent Stock Market Crash - 29th Oct 14
Bank of America's Mortgage Headaches - 29th Oct 14
Risk Management - Why I Run “Ultimate Trailing Stops” on All My Investments - 29th Oct 14
As the Eurozone Economy Stalls, China Cuts the Red Tape - 29th Oct 14
Stock Market Bubble Goes Pop - 29th Oct 14
Gold's Obituary - 29th Oct 14
A Medical Breakthrough Creating Stock Profits - 29th Oct 14
Greenspan: Gold Price Will Rise - 29th Oct 14
The Most Important Stock Market Chart on the Planet - 29th Oct 14
Mysterious Death od CEO Who Went Against the Petrodollar - 29th Oct 14
Hillary Clinton Could Be One of the Best U.S. Presidents Ever - 29th Oct 14
The Worst Advice Wall Street Ever Gave - 29th Oct 14
Bitcoin Price Narrow Range, Might Not Be for Long - 29th Oct 14
UKIP South Yorkshire PCC Election Win is Just Not Going to Happen - 29th Oct 14
Evidence of New U.S. Housing Market Real Estate Bust Starting to Appear - 28th Oct 14
Principle, Rigor and Execution Matter in U.S. Foreign Policy - 28th Oct 14
This Little Piggy Bent The Market - 28th Oct 14
Global Housing Markets - Don’t Buy A Home, You’ll Get Burned! - 28th Oct 14
U.S. Economic Snapshot - Strong Dollar Eating into corporate Profits - 28th Oct 14
Oliver Gross Says Peak Gold Is Here to Stay - 28th Oct 14
The Hedge Fund Rich List Infographic - 28th Oct 14
Does Gold Price Always Respond to Real Interest Rates? - 28th Oct 14
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General - 28th Oct 14
Functional Economics - Getting Your House in Order - 28th Oct 14
Humanity Accelerating to What Exactly? - 27th Oct 14
A Scary Story for Emerging Markets - 27th Oct 14
Could Tesco Go Bust? How to Save Tesco from Debt Bankruptcy Risk - 27th Oct 14
Europe Redefines Bank Stress Tests - 27th Oct 14
Stock Market Intermediate Correction Underway - 27th Oct 14
Why Do Banks Want Our Deposits? Hint: It’s Not to Make Loans - 26th Oct 14
Obamacare Is Not a Revolution, It Is Mere Evolution - 26th Oct 14
Do Tumbling Buybacks Signal Another Stock Market Crash? - 26th Oct 14
Has the FTSE Stock Market Index Put in a Major Top? - 26th Oct 14
Christmas In October – Desperate Measures - 26th Oct 14
Stock Market Primary IV Continues - 26th Oct 14
Gold And Silver Price - Respect The Trend But Prepare For A Reversal - 25th Oct 14
Ebola Has Nothing To Do With The Stock Market - 25th Oct 14
The Gallery of Crowd Behavior: Goodbye Stock Market All Time Highs - 25th Oct 14
Japanese Style Deflation Coming? Where? Fed Falling Behind the Curve? Which Way? - 25th Oct 14
Gold Price Rebounds but Gold Miners Struggle - 25th Oct 14
Stock Market Buy the Dip or Sell the Rally - 25th Oct 14
Get Ready for “Stupid Cheap” Stock Prices - 25th Oct 14
The Trend Every Nation on Earth Is Pouring Money Into - 25th Oct 14 - Keith Fitz-Gerald
Bitcoin Price Decline Stopped, Possibly Temporarily - 25th Oct 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Stocks Epic Bear Market

Eurozone Enters Recession, Worldwide Gold Demand Down in Q3

Commodities / Gold and Silver 2012 Nov 15, 2012 - 09:38 AM GMT

By: Ben_Traynor

Commodities

Best Financial Markets Analysis ArticleTHE DOLLAR gold price drifted lower to $1720 an ounce during Thursday morning's London session, around ten Dollars down on the week, as stocks and the Euro also drifted lower following the release of weak economic growth data from the Eurozone.

The silver price dropped below $32.60 an ounce, more-or-less exactly where it started the week, while other industrial commodities edged higher.


"We like the price action of silver and think there is a good chance of another leg up," says the latest technical analysis from bullion bank Scotiabank.

Prices for longer dated US Treasury bonds meantime ticked lower this morning, as did prices for German bunds, while longer-dated UK gilts saw gains.

The Eurozone fell into recession in Q3, according to official gross domestic product data published Thursday.

Eurozone GDP shrank 0.1% from Q2, a 0.6% year-on-year drop. Germany and France both grew 0.2% quarter-on-quarter, while Italy's economy shrank by 0.2%. Spain's economy also contracted, shrinking 0.3% in the three months to end September, while in the Netherland GDP fell by 1.1% during Q3.

Eurozone inflation meantime fell to 2.5% in October, down from 2.6% a month earlier, consumer price index figures published by Eurostat show.

The European Central Bank's Outright Monetary Transactions program, under which the ECB proposes to buy sovereign debt in the secondary market, "will not lead to inflation", ECB president Mario Draghi told an audience at the Università Bocconi in Milan this morning.

"For every Euro we inject, we will withdraw a Euro," said Draghi.

"In our assessment, the greater risk to price stability currently is associated with the possibility of falling prices in some Euro area countries."

Federal Reserve policymakers meantime discussed the use of using quantitative economic thresholds to communicate their outlook on policy when they met last month, minutes from the Federal Open Market Committee published Wednesday show.

The Fed has said it will buy $40 billion of mortgage backed securities a month until there is a "substantial improvement" in the US labor market, although it has not defined what that means. The Fed is also due to continue with its maturity program known as Operation Twist, which attempts to 'flatten' the yield curve for US Treasury bonds, until it expires at the end of this year.

"Looking ahead," the FOMC minutes say, "a number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity extension program in order to achieve a substantial improvement in the labor market."

Global gold demand fell 11% in the third quarter compared to the same period last year – an all-time record quarter –although it was up 10% from Q2 this year, according to the latest Gold Demand Trends published by the World Gold Council Thursday.

Demand from India, traditionally the world's largest market, was up 9% compared to Q3 2011.
"The strong year-on-year performance was partly reflective of price expectations among Indian consumers," the report says, noting that the Rupee gold price rose to hit new records towards the end of the quarter.

"This fed expectations of further price rises," the report adds, "which – in a slight departure from historical precedent...encouraged consumers to buy into the rising trend."

The value of the Rupee measured against the Dollar was on average 20% lower in Q3 2012 than over the corresponding period last year.

In contrast with India, Q3 gold bullion demand from world number two China was down 8% year-on-year, with investment demand for gold bars and coins down 12%.

"The preference among Chinese to buy into a clear rising price largely explains the drop in investment demand, as range bound price action during July and much of August curbed demand," the Gold Demand Trends report says, adding that slower economic growth also "had a negative impact on consumer sentiment".

"Since the Chinese economy has stabilized following its poor third-quarter growth," a note from Commerzbank says, "Chinese gold demand can also be expected to gather pace again."

Central banks meantime bought 97.6 tonnes of gold bullion during the third quarter, according to the report, which adds that in six of the last seven quarters central bank demand has been around 100 tonnes.

"Gold is beginning to re-establish itself as part of the fabric of the financial system," says Marcus Grubb, managing director, investment at the World Gold Council.

"Against a backdrop of continued global economic uncertainty and elections in China and the US, it is clear from five year rising demand trends that gold's fundamental property as a vehicle for capital preservation continues to endure, as evidenced by this quarter’s increase in global ETF investment, up 56% and continued purchasing by central banks, the ultimate long term investors."

On the supply side, gold mining production was down 1% year-on-year in Q3, according to Gold Demand Trends. The chief executive of world's largest gold producer Barrick said this week that new gold deposits are being found at a declining rate, despite record exploration spending.

Overall supply down 2% following a reduction in the amount of gold being recycled in industrialized nations. US gold recycling firm Cash4Gold filed for bankruptcy in July.

By Ben Traynor
BullionVault.com

Gold price chart, no delay   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.


© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014