Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Hits Shanghai Discount to London on "Money Market" Fall-Out

Commodities / Gold and Silver 2013 Oct 29, 2013 - 02:56 PM GMT

By: Adrian_Ash

Commodities

The PRICE of London settled gold bounced to $1348 per ounce Tuesday morning, halving an earlier 0.9% drop after China's most active gold contract closed below that world benchmark for the first time in 2013.

Overnight trade was "very dull" according to one dealing desk.

Dollar gold then dropped $12 per ounce in 10 minutes, hitting a low of $1341 – some 1.5% beneath Monday's new 5-week high.


The Reserve Bank of India earlier hiked its key interest rate for the second month running.

Shanghai's most actively traded gold contract closed the day equal to $1350.15 per ounce, below the international spot market's then price for London settlement of $1353.70, a rarity last seen in late 2012 according to dealers quoted by Reuters.

Prices on the Shanghai Gold Exchange stood at a $7 premium to London settlement last week, peaking $30 above that international benchmark as the price slump of April to June saw record imports of bullion to the world's second-largest consumer nation.

"Gold achieved the retracement level of $1362 with toppy indicators," says a chart analysis from French investment bank and bullion market-maker Societe Generale. "Expect a consolidation."

"Immediate upside pressure," counters the technical analysis team at Germany's Commerzbank, "will be maintained while the gold price remains above the 1329.85 October 19th low on a daily chart closing basis."

"Gold remains in an uptrend off the October 15th low at $1251," says Scotiabank's New York desk.

"We remain bullish...targeting a full retracement to the $1433 high" hit in August.

Over in China, meantime, interbank loan rates eased slightly from 4-month highs after the People's Bank said it would inject cash to ease a credit crunch, but only if necessary.

"The [recent] rise in borrowing costs plays a crucial role" in China's metal pricing, said one Hong Kong dealer to Reuters. "People don't want to keep the metal and they try to dump it to raise cash."

"It really is driven by money markets," the newswires quotes another.

Analysts at ANZ in Australia said today that "We continue to view gold as precariously placed, while physical demand for the metal remains soft," pointing to "weak demand from China and continued ETF selling" by Western institutions.

So-called "term repo" rates in India – under which the central bank will lend short-term money in return for government bonds and other collateral which are then repurchased by the borrower – were hiked for the second month running today, reaching 7.75% as part of the Reserve Bank of India's quarterly market review.

The amount of money available through such repurchase deals was doubled, however. Bank rate and a key co-operative savings rate were cut.

"Reducing [those rates] and improving the liquidity provided through term repos will reduce short-term rates," notes Gagan Banga, CEO of mortgage lender Indiabulls Housing Finance, "which will keep interest rates on home loans stable."

But former IMF chief economist and new governor of the Reserve Bank, Raghuram Rajan "is attacking [inflation] directly, anchoring inflation expectations," says Radhika Rao, economist at DBS.

"You've seen the Rupee react positively, with the stock market and sentiment on the whole."

The BSE Sensex index of Indian shares today added almost 2% to touch 3-year highs.

The Rupee strengthened a little to extend its 12% rally from August's record lows vs. the US Dollar.

Gold in Indian Rupees also rose further, however, pushing 22-carat gold in Mumbai the equivalent of $1470 per ounce.

With the Indian government's anti-gold imports policies effectively closing the world's heaviest consumer to legal supplies, Sify Finance today put 24-carat gold in Hyderabad at the equivalent of $1600 per ounce.

"There is a major fluctuation in the gold rate and raw material availability is not there," says Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation (GJF)

"For this Dhanteras" – which marks the start of the peak gold-buying festival of Diwali on Friday – "we see a 90% fall in demand," Soni says.

On the contrary, however, the Business Standard in Mumbai quotes local retailers saying that pre-Diwali trade has already risen by 15% from the same period in 2012.

By Adrian Ash
BullionVault.com

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

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(c) BullionVault 2013

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.

Adrian Ash Archive

© 2005-2022 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