$2600 Record Gold Sees Asian Demand Sink, Euro ETFs Shrink
Friday, 9/20/2024 14:39
GOLD PRICES jumped to fresh all-time highs against most major currencies on Friday, breaking through $2600 for Dollar investors as US-listed ETF investment funds expanded but Asian demand retreated, while global stock markets fell from new records amid more bad data from world No.2 economy China.
"Record highs are buy signals," says an opinion column at German financial newspaper
FAZ today, talking about this week's prior
record highs in the Dax and other major equity indices.
"The stock markets have made themselves at home in a very optimistic world. Such stable trends can last a very long time."
But with China's CSI300 index struggling to rally from new 5-year lows on Friday, the Dax fell 0.8% as luxury auto brand Mercedes Benz sank by over 8% after cutting its earnings outlook on fast-falling sales in the world's largest car market.
Gold in contrast leapt above €2340 per Troy for German investors as the price in Dollars leapt 1.6% for the week to $2616, breaking above the $2600 peak hit immediately after
this week's start to the US rate-cutting cycle by the Federal Reserve.
The UK gold price in contrast held below Monday's new spot-market high but also headed for a fresh London 3pm benchmark record at £1964.
"[Consumer gold] demand was modest" earlier this week Reuters quotes a bullion dealer in the southern Indian city of Hyderabad, "but it lost momentum again as prices rebounded to near-record levels."
The jump in global gold quotes took prices in the precious metal's top consumer nations up to fresh record highs, fixing above ¥587 per gram in China's wholesale market and rising above INR 76,000 per grams at dealers in most cities in India.
But that still put Chinese and Indian gold prices at a Dollar-equivalent discount to the price in global trading and storage hub London,
deterring new imports and reflecting weak domestic demand with a gap of $5 and $17 per Troy ounce respectively.
Imports of gold into India had leapt in August, new data said this week, doubling by Dollar value from the same month last year to set an all-time record above $10 billion as dealers and manufacturers seized on
the Modi Government's surprise cut to import duty after his BJP party won the summer's election with a much-reduced majority.
Together with a drop in India's export sales plus silver imports quadrupling by value from August 2023 to almost $800 million, that pushed the trade deficit of the world's most populous nation to
its worst level in 10 months, even as the cost of crude oil imports sank by almost 1/3rd.
"The entire benefit [of the tariff cut]
has kind of vanished" agrees specialist analyst Harshal Barot at bullion-market consultancy Metals Focus.
"Now that prices are going up again, we will have to see if consumers still buy as usual" during the key autumn wedding season and festival run-up to Diwali, peaking with Dhanteras at the end of next month.
Gold No.1 consumer nation China meantime imported zero from the global refining hub of Switzerland last month, new figures show.
"It's little surprise," says Barot's colleague Junlu Liang at Metals Focus, "[because] exports to Greater China had already weakened in July amid slowing demand.
"The fact that local gold prices on the Shanghai Gold Exchange switched to a discount to the London price in August also undermined incentives for importing gold into China."
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Western gold investing has continued to strengthen, with trading volume in Comex futures and options contracts holding firm after last week's jump while North America's 3 largest gold ETFs – led by SPDR's giant GLD product – have expanded by 1.1% so far this month, reaching their biggest size as a group of 2024 to date.
Europe's 3 largest stock market-traded gold products have shrunk in contrast, seeing net outflows of 0.8% since the start of September to the smallest since June but still needing 3.3% more gold bullion to back their shares in issue than at April's 50-month low.
Leading US trusts the GLD, IAU and GLDM have now grown 3.5% by size since June's 53-month low.
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