U.S. dollar gold prices traded just above $1,700 an ounce (oz) throughout Friday morning in London, following an overnight reversal of yesterday's rally, while European stock markets traded lower this morning following losses in Asia, ahead of the release of U.S. GDP data later today.
"The trend remains bearish so long as gold trades below $1,723/oz," says the latest note from Scotiabank technical analyst Russell Browne.
"People are still looking a bit at the downside rather than the upside for the time being, waiting for it to break $1,700/oz," adds Ronald Leung, director at Lee Cheong Gold Dealers in Hong Kong.
Silver prices traded just above $31.70/oz for most of the morning, 1.2% down on last Friday's close, while other commodities also edged lower and major government bond prices gained.
"Commodities have come under renewed pressure, owing to the Asian equity markets weakening in the face of disappointing corporate data and a stronger U.S. dollar," says a note from Commerzbank.
The U.S. Dollar Index, which measures the dollar's strength against a basket of other currencies, hit a new seven-week high this morning.
Dealers in Asia meantime reported a quieter session this morning, with public holidays in Singapore, Malaysia and Indonesia.
"There's light buying from Thailand and that's about it," one dealer told newswire Reuters this morning.
"Surprisingly, the demand from India is not there. . .in fact, Indian consumers started to sell again when the market was a bit higher. Maybe they will leave it to the last minute [before next month's Diwali festival] before coming back to buy again."
Going by London Fix prices, gold looked set for a third straight weekly loss Friday lunchtime in London, the first time this has happened since March.
"We continue to see modest pressure on gold prices in the near term," says HSBC precious metals analyst James Steel.
Here in Europe, Spain's unemployment rate rose to 25% in the third quarter, a new record high, according to official data published Friday.
Santander, the country's biggest bank, yesterday urged the government to seek a formal bailout, which would pave the way for the European Central Bank to buy Spanish government bonds through its Outright Monetary Transactions program.
"A situation in which the Treasury funding is being helped by contingency credit lines offered by any international body will produce a fall in the sovereign debt risk premium and, as a consequence, a fall in banks' risk premium," said Santander chief executive Alfredo Saenz.
A Spanish bailout however is "a necessary, but not a sufficient condition" for ECB bond market intervention, ECB Executive Board member Joerg Asumussen said Friday.
Spain has already agreed a credit line of up to €100 billion from Eurozone rescue funds to finance the restructuring of its banking sector.
Elsewhere in Europe, ratings agency Standard & Poor's last night downgraded French bank BNP Paribas by one notch, from AA- to A+. Ten other French banks, including Credit Agricole and Societe Generale, were put on negative outlook.
Nine more banks have been named as part of the ongoing Libor investigation. Bank of America, Bank of Tokyo Mitsubishi, Credit Suisse, Lloyds, Norinchukin, Rabobank, Royal Bank of Canada, Societe Generale and West LB have all been sent subpoenas by the New York and Connecticut attorney generals.
In South Africa, the majority of striking workers in the gold mining sector returned to work yesterday, Reuters reports, after unions agreed a wage deal with mine operators.
Anglo American Platinum meantime said Thursday it lost an estimated 138,000 oz of platinum output, equivalent to over $200 million, as a result of South African strikes. The chief executive of Anglo American, which owns an 80% stake in Amplats, resigned Friday after leading the company for nearly six years.
In other mining news, African Barrick Gold lowered its 2012 production forecast Friday, when it also reported a 1.6% rise in cash costs per ounce as part of its third quarter results. China Gold is currently doing due diligence as part of its bid to buy Barrick Gold's 74% stake in African Barrick.
Here in London, gold trading through London's 11 market-making banks jumped 35% last month from August to the highest dollar value since the all-time record gold prices of summer 2011.
The average daily volume of gold bullion transferred between wholesale market clearing members climbed 26% last month compared to August.
The daily average volume of silver bullion transferred increased 4% month-on-month in September.
Ben Traynor
BullionVault
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Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault's weekly gold market summary on YouTube and can be found on Google+.
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