U.S. dollar gold prices slipped for a third day in London on Wednesday, rallying from two-week lows beneath $1,761/oz as world stock markets also fell once again and industrial commodities held flat overall.
Silver bullion prices ticked higher to approach $34 per ounce. The Euro currency steadied above a 1-week low of $1.2850.
"The range [in gold prices] has been sideways since mid-September," say Scotia Mocatta's technical analysts.
"Negative divergence [in the Relative Strength Indicator] points to an imminent consolidation and short-term sell off," reckons Axel Rudolph at Commerzbank.
"Gold support is at $1755 and resistance is $1775," says the Commodities Daily from Standard Bank in London.
"Real economic data from China continues to disappoint," adds the Standard Bank note, pointing to the near-7% drop in August's rail freight from a year earlier.
"Weak freight volume data implies a bearish outlook for industrial commodities. It signals weak underlying real demand."
Gold prices in India – the world's #1 consumer market – meantime rose today to 1-week highs as the Rupee fell heavily on the currency market.
"Deals are there, but not in a big way," one private-bank dealer says.
Ahead of late October's wedding season and the run of Hindu festivals in November, "Buying momentum is slow this week," he adds.
High gold prices have pushed upper and middle-class Indian families to buy imitation or "fashion" jewelry instead, reports today's Business Standard, saying there are now 500 shops promoting such items in the state of Gujarat alone.
"The use of fashion jewelry has almost doubled in the past one year due to high gold prices," says Lalit Lathiya of Bhuvneshwari Creation in Rajkot, "and not only in India but overseas as well."
After cutting East Asian and European growth forecasts sharply this week, the International Monetary Fund today warned that the Eurozone could see capital flight of $2.8 trillion unless the region's leaders "act swiftly to restore confidence."
Italy saw its 12-month borrowing costs jump this morning from 1.69% to 1.94% at an auction of €8 billion in new short-term debt.
The Red Cross charity meantime launched a campaign specifically aimed at raising €30 million to help Spain's 300,000 poorest citizens.
Ahead of Wednesday's $21 billion auction of new US debt – part of $66bn in fund raising due this week – Treasury bonds slipped, nudging 10-year yields further above 2.0%.
"The industrialized world is stuck in a severe debt and growth crisis," says Andrew Bosomworth, head of portfolio management in Germany for US bond-fund giant Pimco, quoted by German news magazine Spiegel.
"Central banks are fighting the disease with monetary infusions of previously unknown proportions, and the side effect is a slow but dangerous devaluation of money."
"Gradual inflation has a numbing effect. It impoverishes the lower and middle class, but they don't notice."
Writing in the Irish Times, "The monetary environment has rarely looked more favourable for gold," says economic analyst and consultant Charlie Fell.
"The structural headwinds to robust economic growth, not to mention central bank rhetoric, virtually assure negative real short-term policy rates for many years to come. As a result, it is highly unlikely that the bull market in gold is set to end in the immediate future."
Following largely peaceful protests in Athens on Tuesday against German chancellor Merkel – who visited prime minister Samaras to discuss the next €31.5 billion of bail-out funds – Greek unions today called an anti-austerity general strike for Thursday next week, 18 October.
So-called "fast-track" approvals of four gold mining projects in Greece will see it become Europe's largest producer by 2016, according to a Bloomberg report.
"The most fundamental problem of the mining industry," said Mamphela Ramphele, chairwoman of the world's fourth-largest listed producer Gold Fields in an interview yesterday, "is that it has a 19th century business model which depends on cheap labor, low-skilled labor, and therefore large numbers of workers."
Some 24,000 GoldFields workers remain on illegal strike, with other wildcat protests demanding higher wages still shutting some 40% of South Africa's total gold mining output.
Adrian Ash
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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
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