Gold Prices Steady as China's Stock Market Sinks Despite Rate Cut
Tuesday, 7/23/2024 16:26
GOLD PRICES held flat for the week so far for US, Euro and UK investors on Tuesday, as China's central bank made a surprise cut to interest rates but failed to stop Shanghai equities plunging after the Communist government's Third Plenum disappointed economists and the stock market with only vague plans to revive growth in the world's 2nd largest economy.
Western stock markets also traded unchanged as bond prices rose, edging longer-term borrowing costs down worldwide.
Gold priced in the US Dollar fixed above $2400 per Troy ounce at 3pm in London, heart of the precious metal's trading and storage network, after dropping below that level for the first time in 7 sessions on Monday.
With Chinese equities suffering their worst 1-day drop since
the CSI300 index hit 5-year lows in early 2024, Shanghai gold prices fixed at the lowest in almost 2 weeks, down 3.8% from last Wednesday's new record high of ¥581 per gram.
Now trading over 40% below its record peak of early 2021, the CSI300 today sank 2.1% on Tuesday, extending its year-on-year drop to almost 1/10th but still holding above early July's 5-month low.
Data released last week – before the Third Plenum brought together the CCP's Central Committee and Politburo, led by President Xi Jinping – said that China's economy grew only 4.7% per year in April-to-June, the slowest pace since New Year 2023 and sharply below the 8.1% averaged over the past 20 years.
But instead of the big fiscal stimulus many economists had
expected or hoped for – and despite state media
comparing this meeting to the 11th CPC event of 1978, "which launched reform and opening-up and unleashed China's unprecedented economic rise" – the 50-page 'roadmap' published on Sunday was
heavy on aims, light on detail.
State-run investment funds "
likely remained on the sidelines" today, says Bloomberg, pointing to trading turnover in a group of Chinese stock-market ETF trusts "favored" by what's become known as the "national team" since heavy inflows were seen in January dropped to only 1/4 of Friday's level.
The Government of India meantime surprised bullion traders by unexpectedly slashing gold import duty in the precious metal's No.2 consumer market from 15% to just 6%, the lowest levy in 11 years.
Coming as India's typical
summer lull in gold demand has been worsened by households pulling back in the face of new record high prices, the surprise is part of a "tax simplifying" budget following the BJP party's narrow victory in last month's national election.
"News that Biden is out" of the US presidential election has meanwhile "reduced the odds of a 'red wave'," says bullion-market strategist Nicky Shiels at Swiss refining and finance group MKS Pamp, but raises the odds "of a gridlock" over Washington's spending plans, "which is a better outcome for bonds (meaning lower yields) and risk assets."
Tomorrow brings preliminary manufacturing and services sector activity surveys worldwide for July. Thursday then brings Eurozone bank lending data from June and the USA's first estimate for GDP growth in Q2.
The
UK gold price in Pounds per ounce today traded around £1860 – a new all-time when first reached in April – while gold priced in Euros rose €10 per ounce from Monday's near 2-week low to fix around €2216 in London's bullion market.
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