Gold Falls, Silver Sinks as 'Bond Vigilantes' Drive Down Treasury Bonds and Stock Prices
Thursday, 10/31/2024 15:36
GOLD PRICES fell 2.0% from fresh records on Thursday and silver dived to 2-week lows as jobs and inflation data from the Eurozone and USA, plus the new UK Labour Government's first Budget, raised both borrowing costs in the bond market and doubts over the pace of interest-rate cuts from Western central banks.
Peaking at a new high of $2790 per Troy ounce during Asian business overnight, the spot price of gold in London lost almost $60 by early New York trading hours after US inflation beat expectations for September's core PCE index and claims for jobless benefits fell.
Silver fell harder, dropping almost $1.40 per ounce for the day – and losing 6.7% from last Tuesday's new 12-year Dollar high – to hit $32.51 as 10-year Treasury yields rose to their highest since early July on further falls in bond prices.
Western stock markets also fell, dropping on the MSCI World Index for the 12th of October's 23 sessions and heading for the lowest close in 6 weeks.
That took gold's 1-year rise above the price gains in the SPY ETF of S&P500 stocks. The SPDR Gold Trust (NYSEArca:GLD) has also gained more than 3.5 times the return from the iShares TLT ETF of US Treasury bonds.
"Rachel Reeves has proved that Gilt investors are still vigilant," said a Bloomberg column this morning as the UK state's 10-year borrowing costs in the bond market rose to 12-month highs following Wednesday's tax-borrow-and-spend fiscal plans.
"Janet Yellen at the US Treasury must also contend with
bond vigilantes," Bloomberg goes on after the Democrat White House's finance chief responded to rising US bond yields by keeping the pace of new debt auctions unchanged for the coming 3 months ahead of next week's Trump-Harris presidential election.
Meanwhile in China – where the Communist Government's borrowing costs have flatlined near last month's all-time lows despite better economic data – "investors fear the government is focused on thwarting a crisis, not driving renewed growth,"
Bloomberg adds.
"If reports are anything to be believed, a fiscal [stimulus] package of about $1.4 trillion...falls below the initial estimates of up to $3 trillion as what's required to make a meaningful impact on the Chinese economy."
Gold prices in Shanghai today fell 1.1% from Wednesday's fresh record high above ¥686 per gram for investors, traders and manufacturers in the precious metal's largest consumer market – knocked into 2nd place by former No.1 India on gold demand data for the July-to-September quarter.
Compared to prices in London – heart of the world's gold trading and storage network – that put
Shanghai gold at a discount of more than $33 per Troy ounce, the steepest gap since November the Covid pandemic's second winter began in November 2020.
Euro gold prices today sank 2.3% from yesterday's new high, dropping below €2520 per Troy ounce and erasing the past week's gains after Eurozone unemployment data came in better than expected for September, holding the jobless rate at 6.3%.
Inflation in October in contrast rose more quickly, Eurostat also said, beating forecasts on both the headline and core measure at 2.0% and 2.7% respectively.
"I'm not going to tell you that inflation is defeated yet," says ECB president Christine Lagarde in a new interview with French newspaper
Le Monde.
"All of these data clearly support a more hawkish policy," the
Irish Times quotes one financial economist.
UK gold prices also fell Thursday but dropped less than Dollar or Euro quotes for bullion as the Pound sank on the FX market, losing 1.5 cents to a 2.5-month low beneath $1.2860.
That curbed the
UK gold price in Pound term's slide to 1.2% from last night's fresh record high at £2154 per Troy ounce.
Email us
