Gold Price "Choppy" as Markets Rethink the Obama Bounce
Spot Gold Prices slipped back from an early Asian high of $769 per ounce in London on Wednesday, while European stock markets reversed one-third of Tuesday's "Obama Bounce" after the president-elect's US landslide was confirmed.
The UK's FTSE100 index lost 1.3% on new data showing the manufacturing sector suffering its worst contraction since 1980.
In Paris the Cac40 dropped more than 2% after the EuroStat data agency said Eurozone retail sales fell 1.8% month-on-month in Sept.
The AM Gold Fix here in London reached $753.25, its best level since Thursday against the Dollar and also a five-session high vs. the Euro and Sterling.
"Choppy price action appears to be of a consolidating nature," says the latest market note from Scotia Mocatta, the market-making dealer here in London's professional Gold Bullion market.
"We believe the downside risk in gold remains intact while we hold below $777. A move above this level bodes well for a stabilization in the recent weak move off 930."
Today in Tokyo, Japanese Gold Futures for delivery in 12 months' time closed 3.2% higher as the Nikkei stock index regained another 400 points of last month's 2,700-point loss.
Crude oil held above $68 per barrel, while base metal prices rose sharply from their 55% losses since July.
Both the Japanese Yen and US Dollar today slipped back towards Tuesday's one-week lows vs. the Euro, despite analysts forecasting a 0.5% rate-cut from the European Central Bank tomorrow.
The British Pound also rallied despite widening expectations of 0.75% or even 1.00% cut to UK rates from the Bank of England.
More than twice its level when UK interest rates were last that low at 3.5%, the Gold Price in Sterling today held above £475 an ounce.
For European investors wanting to Buy Gold today, the price rose near a one-week high of €590.
"Physical demand is very strong [while] the cost of production worldwide is rising," said Peter Hambro, chairman of the eponymous mining group, to Bloomberg by phone this morning.
The second-largest Gold Miner now working in Russia, Peter Hambro plc today reported 32% growth in third-quarter output, but said it will delay moving from the junior AIM market to a full listing on the London Stock Exchange due to "extraordinary conditions" in world money markets.
Even though, near-term, Hambro believes there will be "little downward pressure on Gold Prices...we have to conserve resources in a period of great financial uncertainty," he went on.
"Things that will not produce immediate revenue will get put on the back burner."
Global Gold Mining production peaked in 2003 when Dollar prices were less than half current levels.
Total mining costs have more than doubled since then on average, with the shutdown in new finance sparked by the credit crunch leading Mark Citafuni – head of AngloGold Ashanti, the world's No.3 Gold Miner Stock – to warn last week of a "crisis" in global production.