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Gold Slips 0.5% at Record Chinese New Year, S&P Rises, 2024 Elections Roll On

LONDON GOLD PRICES lost 0.5% this week as the record Lunar New Year bid for bullion from the precious metal's No.1 consumer nation China shut down for week-long holidays and US stock markets rose to fresh all-time highs despite geopolitical tensions around 2024's heavy election calendar as the Federal Reserve dashed hopes of a March cut to Dollar interest rates.
"[The United States] is practically implementing a policy of double containment" against Russia and China, said Moscow's President Vladimir Putin and his Chinese counterpart Xi Jinping in a phonecall on Thursday, accusing Washington of "interfering" in their domestic affairs according to a Kremlin aide.
Dropping $11 from last Friday's 3pm benchmark to fix around $2023 per Troy ounce today, bullion traded in London – the world's central trading and storage hub for precious metals – has now lost 2.7% from the record-high gold benchmark price set just before New Year's Eve.
The S&P500 index of US corporate stocks has meantime added 5.6%, breaking through the 5,000 level for the first time ever at Friday's opening in New York.
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Silver prices today fixed at $22.67 at noon in London, down 2.4% for the week and 1/10th cheaper from last December's touch of 7-month highs, before slipping another 30 cents.
With China's stock market sinking as its real-estate bubble bursts, Shanghai's bullion exchange – now closed for the new Year of the Dragon spring festival, the world's heaviest consumer gold-buying festival in the heaviest gold-buying nation – has seen traders paying the equivalent of more than $25 per ounce for silver for 12 weeks running, while the city's afternoon gold benchmark has averaged a price higher than London's record $2078 for the past 3 weeks.
Chart of London gold prices and Shanghai premiums at Chinese New Year since 2004. Source: BullionVault
Only 1 of 25 analysts and traders entering this year's LBMA price forecast competition mention China's private-sector demand as a possible factor impacting gold in 2024, with Alexander Zumpfe of German bullion refiners Heraeus saying that "India's robust economic outlook could boost jewellery demand, countering weaker demand in the West and in China."
"With the whole world waiting for the Fed to cut rates," claims Fortune magazine, "official says history tells many stories of inflation head-fakes," reporting how Richmond Fed President Tom Barkin – a voting policymaker in 2024 – yesterday repeated other US central bank figures saying it would be "smart to take our time" on easing the cost of borrowing, because "No one wants inflation to reemerge."
The odds of a March rate cut – seen as a 90% certainty at the start of this year – have now sunk below 1-in-5 according to betting on interest-rate futures.
The odds of 'no change' at May's Fed meeting have now risen to 2-in-5 says the CME derivatives exchange's FedWatch tool, the highest since end-November.
Fed rates will then finish 2024 at 4.27%, market consensus says, more than half-a-point higher than the level forecast this New Year and the highest prediction since mid-December, eve of the US central bank confirming in its own 'dot plot' forecasts that it expected to cut rates to 4.6% this year.
"I know what the hell I am doing," said 81-year old US President Joe Biden overnight – set to face 77-year old Donald Trump in November's White House elections – in an angry press conference after charges were dropped against him for illegally retaining and sharing classified documents because – in the words of the special counsel assessing his case – he would strike a jury "as a sympathetic, well-meaning, elderly man with a poor memory" unable to defend his actions properly in court.
Supporters of Pakistan's jailed ex-prime minister Imran Khan today began protests as early results showed candidates affiliated with his PTI party taking a narrow lead in the nuclear-armed nation's elections, but current prime minister Nawaz Sharif – jailed during Khan's time in power – nevertheless declared victory for his PMLN party.
Over the last 10 days, Pakistan has seen 22 incidents of election-related violence, says a UK-based humans right charity – including 2 car bombs during Thursday's voting – resulting in at least 115 civilian casualties.
Moscow's Putin – who told former US Fox News anchor Tucker Carlson in a televised interview yesterday that defeat in Ukraine is "impossible" – will stand unopposed for re-election in next month's Russian ballot after anti-war candidate Boris Nadezhdin was blocked by the electoral commission.
India's Hindu nationalist prime minister Narendra Modi – accused throughout his career of failing to discourage anti-Muslim and anti-Sikh violence – will win a third term by a landslide in next month's elections, but with a smaller majority according to the latest 'Mood of the Nation' opinion poll.
India's household demand for gold picked up this week, Reuters quotes local dealers, as prices retreated from last week's fresh domestic Rupee record above INR 65,000 per 10 grams, flipping the rate from a discount to a small premium over London-plus-import-duty prices for the first time in 4 months.
With more than 4 billion adults eligible worldwide to vote in national elections this year, Taiwan last month kicked off the 2024 calendar of major-economy ballots by choosing the DPP party's William Lai Ching-te – described by Beijing as a "trouble maker" but far from alone in the race in restating the island's independence from China – as president.

Adrian Ash

Adrian Ash, BullionVault Gold News

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.

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