Gold News

Gold Price 4% Off Record High as China Buys, Western ETF and Coin Selling Continue

The GOLD PRICE rose further on Friday in London, finishing the session 2.2% above Tuesday's 3-week low in US Dollar terms as new data said Chinese gold coin and small-bar demand has leapt so far in 2024 while Western ETF investors and retail product owners continue to sell.
This afternoon's London 3pm benchmarking came in around $2340 per Troy ounce – around 4% below the record gold price spike through $2400 of 2 weeks ago – and fixing at £1873 for UK investors and €2187 in Euro terms.
Global stock markets also rallied from yesterday's drop following the US GDP inflation shock, trading 2.2% above last Friday's 6-week low on the MSCI World Index with China's CSI300 index cutting its 12-month losses to just less than 10%.
Chinese household gold jewelry demand slipped 3.0% by weight in January-to-March from the first quarter of last year, the China Gold Association said on Friday, as Yuan gold prices shot to a run of new all-time highs.
But with Chinese equities falling, major real-estate firms facing bankruptcy, and cash interest rates falling, China's private gold demand for bullion coins and bars jumped 26.8% by weight amid a wider surge in China's gold investing and speculation.
In contrast, "We hardly purchase any new goods from coin producers," says one German retailer, because the supply of secondhand gold from existing owners is so strong.
Chart of German bank savings account interest rates, after inflation, vs. real gold price in Euro terms (base January 2024). Source: BullionVault
The trend is "particularly noticeable for products purchased between 2010 and 2020," says another German coin shop, noting that anyone buying over decade ago now had a price gain of 260%.
Bank-deposit interest rates have meantime risen back above inflation in real terms after crashing to the most negative of the modern-era during the surge of inflation post-Covid.
With US cash deposit rates at 2-decade highs, the US Mint – which supplies US and global wholesale dealers – has sold only 15,500 ounces of gold Eagle coins so far in April, down more than 90% from this month last year at the weakest since December 2022.
Australia's Perth Mint in March reported its weakest monthly sales for almost 5 years.
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Giant gold-backed ETF trust fund the SPDR product (NYSEArca: GLD) expanded slightly on Thursday, heading for its 3rd weekly inflow in a row.
But the first such run since November, and only the 3rd of the past 12 months, that leaves the GLD's number of shares in issue 10.0% smaller from this point a year ago.
World No.2 gold ETF the iShares product (NYSEArca: IAU) has meantime shrunk 0.1% so far this week, back to its smallest size since March 2020.
"[US] financial conditions are tightening," says a note from French investment bank Natixis.
"Real interest rates are higher, GDP is slowing and equity indices are correcting."
Over in the 20-nation Eurozone, "We must weigh the risk of monetary policy becoming too tight," says European Central Bank policymaker Fabio Panetta – head of the Banca d'Italia – repeating his call from February for the ECB to take "timely action.
"Small rate cuts would counter weak demand, and could be paused at no cost if upside shocks to inflation were to materialize...They would also minimize the likelihood of the ECB...having to hastily resort to larger rate cuts in the future."
Longer-term Western interest rates fell from yesterday's 6-month high in the bond market, while market forecasts for the US Fed's year-end interest rate edged down to 5.01% per annum.
Slightly below Thursday's jump, that was still half-a-point higher than the consensus prediction for this Christmas given at the end of February.
Gold prices were then trading $300 lower per Troy ounce than today's 3pm London benchmarking.

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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