Gold News

Gold Rallies 1% as China Slowdown Worsens, India's Diwali Demand 'Will Grow 15%'

GOLD PRICES rose 1% against the US Dollar in Asian and London trade Wednesday, recovering two-thirds of the earlier drop from last Friday's near-3 week highs after new data said China's economic slowdown is worsening.
 
Platinum rallied 0.5% from yesterday's new 6.5-year lows as German prosecutors began an investigation into car giant VW faking test results for cutting emissions from diesel-engine vehicles, the metal's primary use.
 
Gold priced in Euros rose near yesterday's new September highs at €1016 per ounce as the single currency dipped below $1.11 on the FX market – more than 3 cents beneath last week's peaks.
 
The Caixin PMI survey meantime showed China's manufacturing sector shrinking at the fastest pace since the global meltdown of early 2009.
 
State-owned mining and processing conglomerate China National Gold Group today became the first Chinese member of market-development organization the World Gold Council, joining major Western producers Barrick, Newmont and GoldCorp and 14 other leading producers.
 
"The Chinese gold market," notes the World Gold Council in its announcement, "has grown exponentially over recent decades and China is now the largest market for gold, in terms of both supply and demand."
 
Specialist consultancy Metals Focus, however, expresses "caution towards Chinese demand" for 2015 in its latest Precious Metals Weekly, saying that "our meetings with local contacts point to continued weakness of gold demand amid a slowing economy, particularly in light of poor consumer sentiment in the aftermath of the equity slump."
 
World No.2 consumer India, in contrast, shows "a more positive outlook...although concentrated in the jewellery sector.
 
"The local investment segment is likely to remain disappointing."
 
India's total gold demand between now and New Year could reach the highest level since 2012, Bloomberg quotes Bachhraj Bamalwa of the All India Gems & Jewellery Trade Federation, forecasting a 15% annual rise in Q4 buying, which includes the key Diwali festival.
 
"Indian gold demand traditionally peaks in the fourth quarter," explains Germany's Commerzbank in its daily commodities note, "because the festival season begins at the end of September and the wedding season starts in November.
 
"Increased gold demand in India and China should lend support to the gold price."
 
New data meantime showed consumer prices in neighboring Singapore recording deflation for the 10th month in succession, down 0.8% last month from August 2014 – the deepest drop since the global financial crisis.

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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