Shanghai Flips to First Gold Premium in 2 Months, Silver Cuts Worst Drop in 63 Weeks
Friday, 12/20/2024 15:46
GOLD and SILVER PRICES rallied on Friday from close to 5-week and 14-week lows respectively in London, reducing this week's steep post-Fed losses as weaker-than-expected US inflation data followed an upturn in wholesale bullion demand in No.1 consumer nation China.
With less than 6 weeks until Chinese New Year – now the world's heaviest gold-buying festival, overtaking Diwali in India – Shanghai gold prices flipped to a premium above London quotes for the first time in 2 months, offering new imports of bullion an incentive of $4.70 per Troy ounce.
Although barely half the Shanghai gold premium's long-term average, Friday's figure contrasts with an average Chinese discount equal to almost $14 per ounce so far this calendar quarter, as
China's private sector gold demand weakened further in the face of new all-time record gold prices, now averaging $2666 per ounce since the start of October.
29 January 2025 will mark the start of the Year of the Snake, last celebrated in
2013, when gold prices sank by 27.3%, the worst plunge in over 3 decades.
On a 1-year basis, the difference between Shanghai gold prices and London bullion quotes has risen or fallen together with the weight of China's quarterly consumer demand 75% of the time across the past decade-and-a-half.
In contrast, that demand has shown no firm relationship with global gold prices in Yuan terms, rising or falling together only 45% of the time.
Gold landed in Shanghai today finished 1.8% lower in Yuan terms than Friday last week at ¥612 per gram, its lowest weekend level in a month.
Gold bullion for London settlement then fixed around $2617 per Troy ounce, losing 1.6% for the week in US Dollar terms but rebounding by $40 from Wednesday night's 1-month spot-market low, struck after
the Federal Reserve halved its forecast for US rate cuts in 2025.
Today still marked gold's steepest week-on-week drop since
mid-November's "Trump slump" in gold prices following the Republican presidential candidate's clean sweep of the White House, the House of Representatives, and the Senate elections.
The silver price had earlier recorded its steepest weekly drop in 63 at London's 12 noon benchmarking auction, falling 6.1% for its worst Friday-to-Friday loss since early October 2023.
But like gold,
the price of silver bullion then rallied sharply, rebounding by 50 cents to $29.32 per Troy ounce after new US inflation data said the cost of living rose 2.8% per year last month on the core PCE measure, just below analyst forecasts, while the growth rate of US households' personal income and spending also came in below expectations.
Yesterday's US data news – released the morning after the Fed made its widely-expected rate cut but also shocked the stock, bond and bullion markets by reducing its 2025 rate-cut forecasts – saw economic growth revised sharply higher for July-to-September, with GDP expanding by 3.1% annualized and Q3 inflation on the core PCE measure revised higher to 2.2% per year.
Shanghai silver prices also pointed today to stronger Chinese demand for the more industrially-useful precious metal, reaching the highest in 6 weeks at $2.55 per Troy ounce after dipping below $2/oz last week for only the 3rd time this year.
Email us
