Gold Bounces to $2300 After 2% Plunge, Euro Price Jumps on 'Far Right' Victories
Monday, 6/10/2024 15:26
GOLD PRICES in US Dollar terms rallied Monday after making the biggest 1-day drop in a year, with market experts describing that 2% plunge as 'overdone' and 'technical selling overkill' on news that China's central bank didn't buy any gold in May,
writes Atsuko Whitehouse at BullionVault.
Euro gold prices meanwhile moved higher, rising back to start-June levels, as the weekend's big gains for 'far right' parties in the 2024 European Parliament election – most calling for lower immigration and the roll-back of green energy rules – hit the union's currency, equities and bond prices.
Gold priced in Euros rose 1.0% on Monday to €2143 per Troy ounce as the official currency of 20 out of 27 European Union member countries lost 0.6% against the Dollar to its weakest level in more than a month.
While 'centrist' parties retain overall control in Brussels and Strasbourg, the AfD took 2nd place in Germany, the Brothers of Italy cemented their dominance under Prime Minister Giorgia Meloni, and Marine Le Pen's National Rally took 1/3rd of the votes in France, followed by centrist President Emmanuel Macron calling a snap election at home.
European equities fell hard on the result, led by banks BNP Paribas and Société Generale tumbling more than 8%, while yields on France's 10-year government bonds hit the highest level this year at 3.2% per annum as the debt – already
downgraded at the start of June by ratings agency Standard & Poor's – fell in price.
Spot gold bullion prices in US Dollars edged higher by 0.5% to rise back through the $2300 level after hitting 1-month lows on Friday, down $100 as the weekend began after hitting 2-week highs that morning.
Friday marked the biggest 1-day drop in gold since mid-May 2023, as stronger-than-expected US jobs data followed news that the People's Bank of
China didn't buy any gold bullion for its official reserves in May, the first pause in 18 months.
"Headlines surrounding the unchanged reserve levels [at the PBoC] were overdone," says analyst Rhona O'Connell, bullion specialist at brokerage Stone X Group Inc, adding that the market's shock response was based on "premature suppositions" given that China's
central bank gold buying and holdings have frequently been kept quiet in the past.
Friday's drop "was probably driven by technical selling to the extreme," says Bruce Ikemizu, chief director of the
Japan Bullion Market Association, analysing the charts of Friday's drop.
"Selling led to more selling. It feels like overkill."
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Ahead of last week's price drop, hedge funds and other leveraged speculators in Comex gold futures and options increased their net bullish bets on gold by 0.9% to the highest level in 4 years.
In contrast, speculators cut their net bullish bets on silver by 9% from the highest level in 2 years according to data published by the US regulator, the Commodity Futures Trading Commission (CFTC).
'Managed Money' traders also reduced their net long positions on platinum by 29% and built a fresh all-time record net short position against palladium prices.
Finding over 4/5ths of its end-use demand from auto-catalysts to reduce carbon emissions from gasoline engines, palladium today rallied 0.8% to $922 per Troy ounce, regaining less than a quarter of last week's drop.
Platinum, which derives two-thirds of its demand from industrial uses – primarily auto-catalysts for diesel engines – edged higher by 0.3% to $975 per ounce after plunging 6.4% last week.
The
price of silver – now finding nearly 60% of its annual demand from industrial uses - meanwhile jumped 2.1% to $29.77 per ounce on Monday, rebounding from last week's 3.2% drop.
"Like a lot of people I was
stunned to hear the President decide to do a dissolution just before the Games," said Anne Hidalgo – Socialist mayor of Paris, host to next month's 2024 Olympics – of the end-June vote and then 7th July run-off called by Macron after the EU Parliament results.
"It's really something that is extremely unsettling."
The UK is already scheduled to hold a General Election on 4 July, with Keir Starmer's Labour Party consistently ahead in the polls after 14 years of Conservative rule.
The
gold price in UK Pounds per ounce today edged higher by 0.6% to £1813 following Friday's £60 plunge to a two-month low.
Before then the Federal Reserve's June policy meeting concludes on Wednesday, the same day the latest US consumer price index will be published.
Expected to make no change to interest rates, Fed policymakers will update their 'dot plot' forecasts after repeating their consensus prediction of
3 rate cuts by the end of 2024 at the March meeting, even while holding the cost of borrowing at its highest level in more than 20 years.
The odds of a September rate cut have now dropped to less than 50% from 60% a week ago, according to the CME's FedWatch tool.
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