Gold Hits 33rd Record of 2024 as US Debt Swells, China Slows, Stocks 'Melt Up'
Friday, 10/18/2024 15:13
GOLD HIT yet another new record price in terms of all major currencies on Friday, setting a fresh all-time Dollar high for the 33rd time in 2024 so far as global equity markets also rose, led by chip stocks, on news of weak growth and more stimulus in China, but bond prices flattened and commodities fell.
Rising for the 23rd of 42 weeks so far in 2024,
gold priced in the US Dollar today topped $2717 per Troy ounce, gaining over 2.3% from last Friday's London close with its strongest weekly rise in 5.
Global equities meantime edged 0.3% higher from last Friday on the MSCI World Index, gaining for the 29th week of 2024 to date but holding 0.3% below Monday's new record close.
Western government debt in contrast held around its lowest prices since the end of July, holding the annual yield offered by benchmark 10-year US Treasury bonds at 4.08%, unchanged from last weekend.
With the total quantity of US federal debt outstanding having risen by 58.1% over the past 5 years, the popular iShares Treasury bond ETF (Nasdaq: TLT) has lost almost 1/3rd of its value.
Investing in energy through the USO crude oil ETF has meantime lost 19.1%. But gold's giant SPDR bullion-backed ETF (NYSEArca: GLD) has meantime gained 77.0% while the SPY ETF tracking the S&P500 index of US corporations – which includes 22 of the largest US-listed energy companies but only 1 gold miner (NYSE: NEM) – has almost doubled, inclusive of dividends.
Public debt worldwide has only increased from
2023's record $97 trillion as spending outruns tax revenue – led by US federal deficits – and "if markets become reluctant to absorb all the debt and volatility increases, gold may become the asset of choice," says a note from analysts at US financial giant Bank of America.
"Central banks in particular
could further diversify their currency reserves...[making gold] the last 'safe haven' asset standing."
But "despite rising geopolitical risks, along with higher oil prices and yields, stocks have been able to take it in stride," said a note from retail investor brokerage Charles Schwab earlier this week, asking if US equities can "continue to melt up heading into Election Day?"
Latest data from Bank of America – whose CEO Brian Moynihan this week joined the head of J.P.Morgan Jamie Dimon and Federal Reserve Chairman Jerome Powell in calling on Washington to start addressing America's surging budget deficits – say that
investors just pulled the most money out of cash funds in 12 weeks at $17.4 billion, putting $23.2bn into bonds, the most since October 2020, while adding $21.4bn to stocks, $1.6bn to crypto currency funds, and $1.2bn into
gold ETFs, the most in 12 weeks.
Like gold prices, shares in Taiwanese semi-conductor giant TSMC (TPE: 2330) – often discussed as a prize for China if Beijing should attempt to invade and force a 'reunion' with the island nation – also hit a new all-time high, gaining 83.0% so far in 2024, after it reported earnings jumping by more than half in Q3 on the AI chips boom.
“Hi-tech development
cannot be begged for; we must accelerate the realisation of high-level technological self-reliance and self-improvement,” said China's President Xi Jinping on a televised visit to Hefei Binhu Science City in the formerly "backwater" Anhui region.
Led by tech stocks, Shanghai and Shenzhen's CSI300 stock index jumped 3.6% for the day, almost erasing this week's prior plunge from the equity market's stimulus-talk rebound.
That was despite new GDP data saying that the world's 2nd largest economy grew only 4.6% year-on-year in the July-to-September quarterly, a pace deemed "stable" by state-run media but slowing from the first half's 5.0% pace and missing the politburo's annual target.
"With the incremental stimulus package taking effect...China will
likely achieve the preset annual growth target this year," reckons Zou Yunhan, deputy director of the Macroeconomic Research Office at the State Information Center's Department of Economic Forecasting.
The People's Bank of China today began a special re-lending facility to help companies buy back shares in the stock market, plus a swap facility offering institutional investors cheap loans to buy equities.
"Authorities have
repeatedly disappointed investors with piecemeal steps," says Bloomberg.
Bullion in Shanghai – entry point for all physical precious metals into private circulation in China, the No.1 consumer market – today set its 5th
new daily gold price record of the week, closing at ¥617 per gram for onshore metal paid in Yuan but extending its discount to London prices to more than $8 per ounce.
The exact reverse of Shanghai's more usual premium to London, that signals weak demand in the face of gold's rising price.
Breaking through ¥13,000 per gram in Tokyo and €80,000 for Euro investors meantime, the price of gold neared INR80,000 per 10 grams in India, further
hurting consumer demand ahead of the No.2 consumer nation's autumn wedding and Diwali festival season.
The UK gold price in Pounds per ounce peaked at £2083, making its 35th new record day of the year.
Silver also rose like gold prices, outpacing the 'safe haven' metal with a rise of $1 per ounce for the week to $32.50, touching its highest in a fortnight.
China's President Xi will next week attend the 16th summit of the so-called BRICS nations, held in Kazan, Russia.
To aid the Kremlin's war against Ukraine, global pariah and violent dictatorship
North Korea is sending a "large-scale troop deployment" to Russia, according to the National Intelligence Service of South Korea in Seoul.
Israel has meantime started receiving advanced missile defense system equipment from the USA,
Hareetz reports, even as Washington threatens to cut military assistance over the IDF blocking aid in Gaza.
"The war, my dear ones, is not yet over," Israel's Prime Minister Benjamin Netanyahu said Thursday after the IDF stumbled upon and killed Hamas leader Yahva Sinwar.
"The martyrdom of our brother...will only increase the strength and resolve of Hamas and our resistance," said the Iran-backed militia, with fellow Iran-backed group Hezbollah vowing to escalate its attacks from Lebanon in revenge.
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