GOLD BULLION held in a tight $4 range either side of $1093 per ounce in London on Monday, trading sideways as industrial metals sank to new 6-year lows following the weakest Chinese manufacturing data in two years.
Markit’s manufacturing PMI survey for the Eurozone showed a surprise rise, near the strongest growth of the last year.
US manufacturing activity missed forecasts, in contrast, slipping to a 3-month low on the Institute for Supply Management’s PMI.
“Gold trades sideways,” says one bullion market-maker’s trading desk, pointing to “support” at $1078 per ounce, while “Silver is beginning to show signs of a recovery above $14.50.”
Silver prices today tracked gold bullion, reclaiming half of a tight 10-cent drop from Friday’s close to trade around $14.72 per ounce.
For base metals, “The really poor Chinese manufacturing data would be the primary concern,” Reuters quotes one analyst.
“[Nor has there] been any stabilisation of Chinese stocks, despite all the efforts by the government.”
The Shanghai stockmarket today lost another 1.1%, extending its drop from June’s 7-year high to 30%.
“Physical [gold bullion] demand continues to cushion further price declines,” says Japanese conglomerate Mitsubishi’s precious metals analyst Jonathan Butler in his weekly note, pointing to the US Mint reporting a fourfold surge in sales of gold Eagle coins in July, plus a doubling of trading volume on China’s Shanghai Gold Exchange.
“We attribute this to a combination of attractive gold prices,” says Butler, “[but also] liquidations to meet margin calls on equity market losses.”
At the retail level in China, “Both customer flow and sales of our gold products saw a notable increase
recently,” the Wall Street Journal
quotes a spokesperson for Chow Tai Fook, China’s largest jewelry retail chain.
The quantity of bullion needed to back the giant SPDR Gold Trust (NYSEArca:GLD) shrank last month at the heaviest pace since December 2013 marked the end of that year’s 30% price crash.
With Western investors liquidating 39 tonnes-worth of shares in July, that took the GLD’s holdings to a new 7-year low of 672 tonnes.
Hedge funds trading Comex gold futures and options
meantime held more bearish than bullish contracts as a group overall last week, extending their first such ‘net bearish position’ since current records began in 2006.
“Increasingly,” Bloomberg quotes one small investment-fund manager, “you’re seeing that other than ardent gold bugs, very few people are on the gold bandwagon