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Gold Bullion Hits Triple-Low Near $1180, Sentiment at "Rock Bottom" on Absent China, Rising Dollar

GOLD BULLION rallied 1.3% in London from new 2014 lows against the Dollar on Monday, bouncing after a hard sell-off at the start of Asian trade drove it back to 2013's double-bottom near $1180 per ounce.
"The strong Dollar is a major problem for gold," Reuters quoted Hong Kong dealer Ronald Leung at Lee Cheong.
"Sentiment is very bearish...There's a little bit of physical buying, but [Asian] premiums [above world prices] haven't changed."
Silver prices today tracked gold lower and higher, bouncing from new 4.5-year lows at $16.75 per ounce after data released Friday showed speculative traders in Comex futures and options holding a record number of bearish bets against the metal, with open interest in silver overall hitting near-record levels.
"Sentiment indicators" in the gold bullion market "are at rock bottom levels," agrees the latest quarterly letter to precious metals fund clients from Tocqueville Asset Management, pointing to the lowest reading in 8 years on one sentiment index, and the second lowest since 1984 on the Hulbert Gold Newsletter Sentiment Index.
"These are cheery numbers to a contrarian," says Tocqueville's commentary, " reminiscent of the low regard held for gold in the late 1990s."
With the key Asian markets of China, Singapore, India, Malaysia and the Philippines closed today for holidays, "Gold was under pressure immediately" at the start of Monday's trade, notes Swiss refining group MKS.
Following Friday's sharp drop – when precious metals prices were "pummeled" after better than expected US jobs data according to another analyst – "Friday night's low failed on the open and we had the yellow metal trading down towards the December 2013 low.
"Continued US Dollar strength will have the December as well as June 2013 low of $1180.50 under pressure in the short term."
"[Only] two things stand in the way of more Dollar strength," says Standard Bank's forex strategist Steven Barrow – "the market's own exuberance and the October 2-29 Federal Reserve meeting."
"Market focus," says London market-maker Barclays' analyst Suki Cooper, "will now shift towards the extent of strength in Chinese gold demand after the national holiday."
With its financial markets due to re-open Wednesday after the long National Day holidays, China should expect to see economic growth miss Beijing's 7.5% annual target for the next 3 years, the World Bank said today.
"One striking fact," says Kenneth Rogoff, formerly chief economist at the IMF and now professor of economics at Harvard University, "is that annual growth in electricity demand has fallen sharply, to below 4% for the first eight months of 2014, a level recorded previously only in the depths of the global financial crisis that erupted in 2008."
The world's second-largest economy, China overtook India in 2013 to become the largest consumer and importer of gold bullion.
Pro-democracy protests in Hong Kong meantime focused Monday around government buildings, but local officials said they had no immediate plans to clear access.

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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