Wholesale-market prices to buy gold fell 0.5% to $1,770 per ounce in Asian and London trade Monday, holding more than $25 below Friday's new 11-month high as world stock markets also fell together with commodity prices.
Chinese traders wanting to buy gold saw the price fall sharply as the Shanghai futures market re-opened after the long Golden Week holidays.
Silver prices fell nearly 5% from last week's new 7-month high against the US dollar, hitting the lowest level in nearly two weeks.
"We are somewhat cautious on gold here," says a note from commodity brokerage Intl FC Stone. "It has had a very good run higher over the past several weeks, while chart-wise, it looks like it could back away further from stiff resistance between $1790-1800.
"However, we still would look to buy gold on any substantial pullback, as it will likely be one of the prime beneficiaries of the massive easing policies we are seeing put through practically the world over."
Monday saw both the Japanese and US financial markets closed for national holidays.
Last week saw a new record in the size of gold ETFs, with the volume of bullion held to back these stockmarket-traded trust funds swelling to nearly 2,570 tonnes according to Bloomberg data.
Speculators in the US gold futures and options market also raised their betting, taking their net long position (of bullish minus bearish positions) to its highest level since August 2011 at the equivalent of 941 tonnes.
So-called "small speculators" led the charge, raising their net long position as a group for the 7th week running to equal 195 tonnes – a series record according to official data from the CFTC regulator.
"The weekly uptrend remains in place" in Dollar gold prices, says the latest technical analysis from bullion market-maker Scotia Mocatta, "with support at $1613 and resistance at the all-time high of $1921."
"Momentum was slower" last week in the growing gold futures' position however, notes Standard Bank's commodity team here in London.
"That indicates market participants are increasingly wary of adding length in this post-QE3 environment."
Over in the commodity market Monday morning, crude oil lost more than 1% and base metals also fell hard after the International Monetary Fund cut its growth forecast for the East Asian economies.
Now predicting 7.7% growth for 2012 – down from May's forecast of 8.2% – the IMF says next year will see growth of 8.1% rather than the previous prediction of 8.6%.
ANZ Bank meantime warns that slowing demand from China could see one-in-three of the 900-odd mineral projects now being planned in Australia put on hold.
Advertisements for new jobs in Australia have been declining for six months, ANZ research adds elsewhere, taking the total of vacant positions down 11% from a year ago.
"The big bogeyman in the closet is China and everyone is trying to guesstimate if it's going to have a hard landing or a soft landing," says Philippe Gijsels at BNP Paribas Fortis Global Markets in Brussels, speaking to Reuters.
China's demand to buy gold is now the world's second-heaviest after India. Together those two countries account for over 50% of annual consumption worldwide.
HSBC analysts today said China's services sector grew sharply in September, rebounding from a one-year low on the bank's Purchasing Managers' Index.
Those data are at odds however with Beijing's official non-manufacturing PMI released last week, which showed the services sector of the world's second-largest economy slowing to its weakest level in two years.
Meantime in Europe, finance ministers from the Eurozone states today gathered in Luxembourg for the first board meeting of the new €500 billion Stabilization Mechanism fund.
Spanish bond prices rose with German, French and Dutch government debt – nudging their interest rates lower. Italian bond prices slipped, raising Rome's borrowing costs.
The Euro edged back beneath $1.30 as the US Dollar rose against all currencies bar the Japanese Yen.
Eurozone investors wanting to buy gold saw the price hold steady at €1,367 per ounce, a level first touched in September 2011 that's now 1.4% below last week's new all-time record.
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