The wholesale market gold price fell further Thursday in London, falling hard to eight-session lows at $1,587 per ounce following last night's "no change" decision from the Federal Reserve on new US quantitative easing.
Major-government bond prices pushed higher, but the euro currency retreated, down nearly 1¢ from its post-Fed high to trade back down at $1.2650.
Silver prices hit a new low for the month of June at $27.70 per ounce, while commodity indices dropped to 19-month lows and US crude fell to seven-month lows beneath $80 per barrel.
European stock markets also fell, with London's losses led by mining equities.
"Achieving a durable and prompt exit from the euro area crisis, as well as avoiding the US 'fiscal cliff' [due start-2013] is crucial for sustained global recovery," said a new report from the International Monetary Fund on the outlook for the G20 group of large economies.
First estimates for China's manufacturing activity in June showed an eighth month of contraction on HSBC's purchasing manager' index – the longest such stretch since 2008.
Germany's PMI joined the rest of the Eurozone in showing a sharp contraction in both manufacturing and the services sector.
With the gold price slipping 2.5% for the week so far, "Hats off to the players in the gold market," says Edward Meir for INTL FC Stone, "who had the sense not to join in on the rallies [in commodities and equities] that were taking place" before the US central bank's Wednesday announcement.
"The high expectations in advance of the US Fed's meeting were priced out" of other asset classes, agrees Eugen Weinberg at Commerzbank in Frankfurt.
"[But] even without unconventional monetary policy," he adds in today's commodity note from the German bank, "central banks are currently shoring up the gold price...by diversifying their currency reserves and continuing to buy gold."
Russia's central bank bought another 14 tonnes of gold bullion in May, according to data from the Interfax agency Thursday.
That takes net purchases by the official sector to almost 150 tonnes for 2012 so far, based on data compiled by the World Gold Council market-development group.
"It is clear that BRICS countries have entered the stage when they can demand to be reckoned with," said Russia's deputy finance minister Sergei Storchak to reporters this morning, suggesting that Brazil, Russia, China, India and South Africa may launch a joint "anti-crisis" fund to challenge the IMF in Washington.
"It will be a parallel mechanism in addition to the IMF," said Storchak.
Between them, the so-called BRICS countries now hold over $4 trillion in central-bank reserves, including 2,650 tonnes of gold bullion – more than 8% of national gold reserves worldwide, and greater than all single hoards but the US and Germany's.
"Despite trading well through support in the low $1,600s, gold managed to close with only a small loss on the day," says last night's report from bullion bank Scotia Mocatta.
"The bearish trendline off the March highs should provide resistance at $1632."
"Gold's dip below the $1,600 level has confirmed our suspicion that the market was expecting something more [from the US Fed]," says today's analysis from Standard Bank in London, citing support for the gold price at $1,585.
Any move in the gold price on news of a Spanish bank rescue "could be a knee-jerk move" Standard Bank adds, "given that markets have already discounted that Spain needs a bank bailout."
Madrid today enjoyed strong demand for €2.2 billion of medium-term debt sold at auction, but still had to pay investors record-high interest rates of 6.07% per year on 2017 bonds – up from 4.96% at last month's sale.
Set to announce his coalition cabinet in Athens on Thursday, new Greek prime minister Antonis Samaras will also ask Brussels to give Greece a further two years to meet its agreed government spending and debt targets, according to press reports.
Next week European Union president Herman Van Rompuy will present a "blueprint" for the Euro currency union to national leaders, according to un-named officials cited by Bloomberg.
The plan includes "jointly issued short-term bills, a debt- redemption fund and common banking supervision," says the newswire.
"There are no concrete plans that I know," German chancellor Angela Merkel said at a press conference in Berlin last night, "but there is the possibility of [the EU bail-out funds] buying government bonds on the secondary market.
"But that is a purely theoretical comment," she added – contracting Italian caretaker prime minister Mario Monti's earlier call for discussion on the issue.
"This is not a subject for debate right now."
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