Today’s AM fix was USD 1,314.75, EUR 971.73 and GBP 821.67 per ounce. Yesterday’s AM fix was USD 1,333.75, EUR 975.82 and GBP 832.03 per ounce.
Gold fell $19.30 or 1.44% yesterday, closing at $1,323.50/oz. Silver slipped $0.80 or 3.53% closing at $21.88. Platinum dropped $22.76 or 1.5% to $1,450.50/oz, while palladium slid $7.78 or 1.0% to $735.22/oz.
Gold was down 0.2% in October and after two weeks of consecutive gains, gold is headed for a 2% weekly drop. This has turned the short term technical picture negative once again. However, the months from November to February have seen strong gains in recent years, and this in conjunction, with the strong fundamentals should be positive for gold.
Gold is trading close to its lowest in nearly two weeks, hurt by the fall yesterday. Month end profit taking, some strong U.S. economic data and a higher dollar were cited for the reason for gold’s weakness.
Western premiums are holding steady. Gold Krugerrands (1 oz) are trading at $1,377.15 at premiums between 4.75% and 5.5% and gold bars (1 kilo) are trading at $43,536.58 at premiums between 3% and 3.5%.
Government data in the U.S. showed that the pace of business activity in the U.S. Midwest jumped in October, exceeding expectations and U.S. jobless claims declined somewhat last week.
Other real world facts regarding the very poor state of the U.S. economy are being ignored for now. One such important indicator regarding the health of the U.S. economy continues to flash red.
There are a record 47.6 million Americans, representing 23.1 million households, on food stamps today. The cost of the program will hit $63.4 billion in 2013 - less than what the Federal Reserve is printing every single month today. Yet, very tough benefit cuts to food stamp recipients kick in today. The move by Congress will siphon $5 billion from a program that helps one in seven Americans put breakfast, lunch and dinner on the table.
“If you look across the world, riots always begin typically the same way: when people cannot afford to eat food,” Margarette Purvis, the president and CEO of the Food Bank for New York said.
More ‘irrationally exuberant’ market participants are ignoring the poor fundamentals of the U.S. economy. Most market participants fear an improving economy could prompt the U.S. central bank to cut back its, very bullion friendly, money printing measures. This remains highly unlikely and far more likely is a double dip recession - potentially a very sharp one which will lead to even more quantitative easing and currency debasement.
The head of the eurozone finance ministers Jeroen Dijsselbloem said yesterday that governments need to prepare legislation for bail-ins. His important comments were not widely picked up, but they are important as they are another sign that bail-ins and deposit confiscation will be seen when banks get into difficulty.
Gold Seasonal - Monthly Performance and Average (10 Years)
China bought more than 100 tonnes of gold from Hong Kong for a fifth straight month in September as demand for bullion bars and jewellery stayed strong. Chinese demand appears to have fallen marginally in recent days but remains on track to overtake India as the world's biggest store of wealth gold buyer this year.