Best of the Week
Most Popular
1.SNP Offers Labour Deadly Death Embrace Alliance, Holding England to Ransom, Destroy UK From Within - Nadeem_Walayat
2.Gold And Silver – Most Widely Used Currency In Western World? Stupidity - Michael_Noonan
3.Election Forecast 2015 - Coalition Economic Recovery vs Labour Collapse - Nadeem_Walayat
4.Election Forecast 2015 - Debates Boost Labour Into Opinion Polls Seats Lead - Nadeem_Walayat
5.Why are Interest Rates So Low? Ben Bernanke, Confused as Ever, Starts His Own Blog to Prove It - Mike_Shedlock
6.Leaders Debate Election 2015 - Natalie Bennett Green Party Convincing Anti-Austerity More Debt Argument - Nadeem_Walayat
7.Labour Economic Collapse vs Coalition Recovery - UK Election Forecast 2015 - Video - Nadeem_Walayat
8.China’s Stock Market Mania; How High can Red-chips Fly? - Gary_Dorsch
9.Gold and Misery, Strange Bedfellows - 31st Mar 15 - Dan_Norcini
10.Ed Miliband Debate Election 2015 Analysis - Labour Spending, Debt and Economic Collapse - Nadeem_Walayat
Last 5 days
SNP Publish England's Suicide Note as Pollsters Still Forecast Labour-SNP Election Disaster - 21st Apr 15
Characteristics of Extremely Over-Indebted Economies - 21st Apr 15
Trader Education Week -- a Free Event to Help You Learn to Spot Trading Opportunities - 21st Apr 15
Gold & Silver Alert: Silver Stocks’ Signal - 20th Apr 15
Now is the Time to Buy Resource Stocks, Especially Gold Equities - 20th Apr 15
DJ Transportation & Utility Averages Suggest Stocks Bull Market Is Over - 20th Apr 15
Crude Oil Price Bull Market Hope - 20th Apr 15
Stock Market Bears Get Slaughtered Despite Greece Counting Down to Grexit Financial Armageddon - 20th Apr 15
The Rise of the Paper Machines - 20th Apr 15
Gold and Silver Inflection Point - 20th Apr 15
SP500: A Butcher's Stock Market (Chop Chop Chop) - 20th Apr 15
Are Stock Market Bears Slowly Gaining Control? - 20th Apr 15
Sugar Commodity Price Bear Rally - 19th Apr 15
Avoid the Spread of the Stock Market "China Syndrome" - 19th Apr 15
Stock Market Going Nowhere Fast - 19th Apr 15
An Easy Way to Profit From the Two Biggest Trends in the Stock Market - 19th Apr 15
No Scripture Is Divine, Authentic and Beyond the Creation of the Human Brain - 19th Apr 15
Inflation, Central Banks, and Business Cycles - 18th Apr 15
Stock Market Correction May be Nearing End - 18th Apr 15
UK Housing Crisis, Immigration, Population Growth, Election Forecast 2015 - Video - 18th Apr 15
Q1 Corporate Earnings Risky for Stocks - 17th Apr 15
US Stock Market Getting Scarier by the Day - 17th Apr 15
Stock Market Watershed Day - 17th Apr 15
Gold Price Has “Hallmarks Of Market That Is Bottoming” - 17th Apr 15
Chinese Stock Market - Men Go Mad in Herds - 17th Apr 15
Two Stocks Offering Investors High Yields and Profits - 17th Apr 15
Gold Price Has “Hallmarks Of Market That Is Bottoming” - 17th Apr 15
Chinese Stock Market - Men Go Mad in Herds - 17th Apr 15
Two Stocks Offering Investors High Yields and Profits - 17th Apr 15
King Dollar Hurting Stock Market Corporate Earnings! - 17th Apr 15
Production Declines Hide Bigger Crude Oil Storage Issues - 17th Apr 15
Top Three Takeaways From Today’s OPEC Crude Oil Report… and How You Can Profit - 17th Apr 15
How to Profit from Australia's Healthiest Biotech Stocks - 17th Apr 15
What Is Really Driving Gold Price? - 17th Apr 15
Will Ever More Boomers Selling Retirement Assets Change Investment Prices For Decades? - 16th Apr 15
Won't Be Contagion with 'Grexit' Greece Euro-zone Exit - 16th Apr 15
Sharp Decline in USD/CAD and Its Consequences - 16th Apr 15
Blackstone is like Apple, Google, Hermes, Boeing - 16th Apr 15
The Most Dangerous Financial Headline I've Seen Since the 2008 Crisis - 16th Apr 15
Is Legal Tax Avoidance Extinct in the UK? - 16th Apr 15
Why Russia Will Send More Troops to Central Asia - 16th Apr 15
More Thoughts on the Current Crude Oil Market - 16th Apr 15
U.S. Treasury Secretary Warns Greek Exit Will Cause Enormous Disruption and Hardship - 16th Apr 15
The Hottest New Place to Find Stock Dividend Income in Q2/2015 - 15th Apr 15
How to Escape the Pensions Squeeze - 15th Apr 15
Water Crisis Game Changing Water Revolution - 15th Apr 15
The Drying of California - Corporate Farms Control of Water - 15th Apr 15
OPEC Going Broke, Dumping U.S. Dollars. Is That Good Or Bad? - 15th Apr 15
OPEC Just Confirmed It’s Losing the Oil War - 15th Apr 15
Four Uranium Companies Poised to Profit from the Growth of Nuclear Power - 15th Apr 15
Stock Investing Tread Softly… and Carry a Big Risk-Management Calculator - 15th Apr 15
Crude Oil Price Technical Outlook - 15th Apr 15
Important Bitcoin Price Action - 15th Apr 15
UK House Prices, Immigration, Population Growth and Election Forecast 2015 - 15th Apr 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

US Historic Bubble

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.


© 2005-2015 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