Gold Breaks 600 CNY, Misses USD High as Diwali Demand Starts in India
Monday, 10/14/2024 14:23
GOLD PRICES steadied on Monday, after reaching new record highs against all major currencies except the US Dollar and Swiss Franc and prices in No.2 consumer India shifted to a premium for the first time in two months ahead of the Diwali festival season,
writes Atsuko Whitehouse at BullionVault.
Spot gold in US dollars climbed as high as $2666 per ounce during early trading on Monday, $18 below the all-time high recorded on 1 October, before It gave up all gain to $2653.
The yellow metal in Japanese Yen hit a record of ¥12,792 per gram, while Chinese gold prices jumped to a new high of ¥601 per gram.
Meanwhile, gold priced in Euros reached a new high of €2439 on Monday, while
the UK gold price in British Pounds also set a fresh record of £2040 per ounce.
“The reality is that the rally has been driven by a combination of factors — broad-based buying across the different parts of the market combined with a
lack of sellers,” said Joni Treves, a gold analyst at UBS in Singapore.
Year-to-date, gold has risen 28.3% in US dollars, 30.0% in Euros, 25.1% in Pounds, and a notable 35.6% in Japanese Yen, as the currency weakened nearly 6% against the greenback.
Teves has revised her gold price forecast upward, projecting $2800 per ounce by the end of 2024, a $200 increase from the bank's earlier estimate, and $3000 by the close of 2025. She highlighted such factors as anticipated US interest rate cuts, a weaker dollar, and strong demand from central banks and other official institutions, who were alarmed by the US’s ability to freeze Russia’s dollar assets.
Gold demand in India, the No. 2 bullion consumer nation, rose last week ahead of the Dussehra festival on Saturday, an occasion considered auspicious for buying gold. Physical gold dealers in India charged premiums for the first time in two months.
It was $3 per ounce over official domestic prices, inclusive of 3% sales tax and 6% import duty, which were
slashed from 15% at the end of July, after a decade of lobbying by India’s bullion and jewelry industry. The premium surged as high as $20 soon after the tax cut.
"While gold prices have increased recently, leading to some softening in sales in the past couple of days," said Saurabh Gadgil, chairman of PNG Jewellers in India, pointing the prices reached its record high of 76,331 rupees per 10 grams early last week.
“
Overall sentiment remains bullish,” he continued.
India's gold imports rose by 216% compared to the previous month, reaching 136 tonnes, as jewellers stocked up in anticipation of strong festive season demand. However, the import volume subsequently declined to 60 tonnes in September, primarily due to a significant increase in gold prices.
Gold prices on the Shanghai Gold Exchange continued to show a discount to London, easing to $15 per ounce on Monday after wholesale bullion in the metal’s No.1 consumer market increased the weekly average to $27 last week, signalling poor demand with the steepest disincentive to new imports since
China’s record Covid-pandemic gold discounts of 2020.
Among
gold-backed ETF investment trusts, the giant GLD last week grew 0.2% to the highest since early January, while No.2 gold ETF the IAU expanded 0.7% for the week to be the largest size since early August.
Global gold ETFs maintained their positive momentum in September, marking the fifth consecutive month of inflows. This streak has reversed the year-to-date trend, pushing global gold ETFs into positive territory with a net inflow of $389 million for the year so far.
Latest data show that hedge funds and other leveraged speculators in Comex gold futures and options cut their bullish betting on gold as a group in the week-ending 8 October, and their bearish betting unchanged.
Overall, that pushed the net long position of Managed Money traders 11% down from its all-time high of $67 billion recorded three weeks ago, however it was 113% more than the end of 2023.
“There is 10% of unexplained Gold price action, given year to date central bank & Investor (ETF+COT) flows,” said Nicky Shiels, head of metals strategy at Swiss refining and finance group MKS Pamp.
“Bears will say Golds overshot, but bulls argue there’s a
lot of other OTC investment buying other than central banks driving prices, and its sticky buying…”
Prices for silver, primarily an industrial metal, which finds nearly 60% of its annual demand from industrial uses, fell as much as 2.2% to $30.84 Monday morning before paring a half of its loss, as China’s highly anticipated announcement of financial stimulus plans on Saturday was big on intent but stopped short of producing a headline monetary stimulus figures.
China’s main CSI 300 index closed 1.9% higher on Monday after a volatile session, as investors evaluated the recent announcements, recovering from its worst week since late July.
European stocks were little changed on Monday as the pan-European Stoxx 600 dipped 0.02% as traders wait for the European Central Bank’s policy meeting on Thursday.
Japanese and US markets are closed today due to the holidays.
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