Gold Rebound Misses $2500 as US Job Openings Sink, China's Discount Deepest in 3 Years
Wednesday, 9/04/2024 15:43
GOLD BULLION rallied from near 3-week lows in London trade on weak US jobs data Wednesday but failed to regain the $2500 level after prices in the metal's No.1 consumer China suggested the weakest balance of bullion demand over supply in 3 years.
Global stock markets meanwhile extended
this week's miserable start to September as China's services-sector PMI survey for August showed growth slowing hard.
But US equities opened flat from Tuesday's sell-off as betting jumped that the Federal Reserve will make a sharp cut to interest rates in 2 weeks' time following today's news that job openings in the world's largest economy fell to the lowest level in July since New Year 2021.
The 'Jolts' figure "was lower than all estimates in a Bloomberg survey of economists," says the news-wire.
Lay-offs meantime
rose to their highest since March. Jobs data and the unemployment rate for August are due out this Friday.
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Overnight in China, gold prices had fallen to the heaviest discount versus London quotes since June 2021 at the equivalent of $11 per Troy ounce.
Coming after
the Shanghai gold premium set record highs in late 2023 and then averaged an incentive for fresh bullion imports of $35 per ounce over the past 12 months – more than 4 times the typical level of the past 2 decades – that suggests weak demand in the precious metal's No.1 mining, importing and consumer nation.
London's 10:30 benchmarking auction saw gold set its lowest AM fix since mid-August, but the spot price then rallied $27 per Troy ounce from its morning low of $2472, peaking less than 90 cents beneath the $2500 mark.
Tuesday's 2.1% drop in the S&P500 and 3.2% drop in the tech-heavy Nasdaq saw volatility in US stocks jump by 1/3rd, while crude oil fell to new 2024 lows and the US yield curve re-inverted after
briefly ending the bond market's 'recession warning' for the first time in 2 years.
Shares in US semi-conductor manufacturers yesterday sank the most since the Covid crisis of March 2020, led by stock-market darling Nvidia (Nasdaq: NVDA) as the world's 2nd most valuable listed company lost a record $279 billion of capitalization – a drop equal to the annual economic output of major Peru.
Given that NVDA sank by 9.5%
even before news broke that it has been subpoenaed by the Justice Department's antitrust team for possible monopoly law-breaking, "What’s most alarming about all this is that the best explanation anyone could offer was the date," says
the Points of Return newsletter from Bloomberg columnist John Authers.
"September is historically the worst month for the US stock market," says Authers, cutting 1.2% off the S&P500 price index on average over the past 95 years
according to MarketWatch.
Gold in US Dollar terms has meantime risen in only two Septembers since 2011,
losing 0.04% this month on average over the past 2 decades.
"Go for gold," urges US investment bank Goldman Sachs' commodities team, now slashing one-third off
the bullish call for 2025 copper prices which they made in May as the industrial metal jumped to new all-time highs.
With the price of gold already 1/5th higher in 2024 as copper sinks nearly 25% from that peak of 4 months ago, "Imminent
Fed rate cuts are poised to bring Western capital back into the gold market," says Goldman's, "a component largely absent of the sharp gold rally observed in the last two years."
Yesterday's stock-market slump failed to spur new inflows of investor money into either the giant SPDR Gold Trust (NYSEArca: GLD) or the No.2 gold ETF the iShares products (NYSEArca: IAU).
Trading volume in Comex gold futures and options contracts in contrast jumped by more than 1/3rd to the heaviest in over 2 weeks.
Silver in London trade today rallied 50 cents from yesterday's 3-week low beneath $27.75 per Troy ounce, but
platinum prices dropped to $901 – the lowest since late April – before rebounding by $10 per ounce while palladium hit a new 3-week low near $930 before adding 1.5% in London trade.
Following the Jolts numbers, almost
1-in-2 bets on the Federal Reserve's September meeting now sees the US central bank slashing the cost of borrowing by half-a-percentage point when it meets a fortnight from today, up from fewer than 1-in-3 at the end of last week.
While activity in China's services sector continued to expand in August, the pace of growth badly missed analysts' expectations, with the slowdown leading to some firms to cut staff according to the Caixin/S&P Global PMI survey.
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