Gold prices slipped modestly in the early morning US trading period as new survey shows physical demand at the lowest point since 2009.
Gold for August delivery on the Comex division of the New York Mercantile Exchange fell $3.00 or 0.3 percent to $1,093.40 per ounce. Trade has ranged from $1,090.70 to $1,097.90.
According to the second quarter Thomson Reuters GFMS gold survey, physical gold demand sank 14 percent year-over-year to the weakest since 2009.
China, meanwhile, imported just 37.1 tonnes of gold on a net basis in June, according to the Census and Statistics Department of the Hong Kong Government, once again supporting the widely held assumption that demand in one of the world’s largest consumers is faltering. Premiums have been stagnant around $2 on the Shanghai Gold Exchange for some time and have yet to really react to the recent collapse in international prices.
The Shanghai Composite Index has been ravaged by extreme volatility in the past few weeks, falling 8.5 percent yesterday – the biggest one-day selloff since 2007 – and currently trading at 3,663.0, down 1.7 percent.
“A major part of the weak demand is no doubt attributable to the sharp rise in Chinese equity markets in the first five-and-a-half months of the year, which reduced the attractiveness of gold,” Commerzbank said. “We assume that the slump in equity markets that began in mid-June and the fall in gold prices themselves will generate increased interest in buying gold in the second half of the year, which should lend support to the gold price.”
Today begins the initial two day Federal Open Market Committee (FOMC) Meeting. A rate hike is unlikely, but investors will suss out any information in regards to a possible September hike after an increasingly hawkish tone has emitted from the Federal Reserve.
Turning to wider markets, Germany’s DAX and France’s CAC-40 were up 1.5 percent and 1.2 percent respectively, while the euro was 0.5 softer at $1.1031 against the dollar.
In data today, S&P/CS composite-20 HPI, Flash services PMI, CB consumer confidence and the Richmond manufacturing index is due for release in the US later today.
As for other precious metals, Comex silver for September delivery declined 5.5 cents to $14.550 per ounce. Trade has ranged from $14.510 to $14.620.
Platinum for October settlement fell $10.10 to $978.80, while the most actively traded palladium contract was at $616.65, up $3.55.
(Additional Reporting by Ian Walker; editing by Tom Jennemann)
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