SPOT MARKET gold bullion prices fell
towards $1740 per ounce Thursday lunchtime in London, 0.8% down on the week so
far, while most European stock indexes also ticked lower ahead of today's
European leaders' summit in Brussels.
"While [gold] holds below $1758 the risk is to the downside,"
says the latest technical analysis report from bullion bank Scotia Mocatta.
"The path of least resistance for gold appears to be lower,"
agrees HSBC analyst James Steel.
"Institutional investors give the impression of losing
enthusiasm for another challenge of gold's $1790-1800 price levels."
Like gold, silver
bullion dipped towards the end of London's morning trading, trading lower
towards $33 an ounce. Other industrial commodities were broadly flat on the day,
while US Treasury bonds gained.
China's economy grew by 7.4% in the year to the third quarter –
down from 7.6% in Q2 and the seventh successive quarter of slower growth –
according to official GDP figures published Thursday.
"The economic situation in the third quarter is relatively good
and we have the confidence to say that the Chinese economy is showing signs of
stabilizing and will continue to show positive changes," Chinese premier Wen
Jiabao said Wednesday ahead of the release.
Wen warned however that "China still faces considerable
difficulty in the fourth quarter."
"Our economic growth still faces a very challenging external
environment as it is extremely difficult to expand external demand," Wen said,
"[but] our resolve to stabilize the economy is very firm."
"It might take another couple of quarters for growth to
significantly recover, "says Bank of America Merrill Lynch economist Lu Ting,
"but we believe the risk for a hard landing is getting increasingly smaller."
Here in Europe, European Union layers have advised that plans
to grant banking supervisory powers to the European Central Bank may be in
breach of EU treaties, according to draft documents leaked to reporters.
The plans, which will be discussed by European Union leaders at
the two-day EU summit starting today, would see the ECB take on supervision of
all Eurozone financial institutions.
The EU lawyers' conclusion, the Financial Times reports, is
that "without altering EU treaties it would be impossible to give a bank
supervision board within the ECB any formal decision-making powers".
Non-Euro members that opt into the supervision regime would
thus be unable to vote on ECB decisions, with the supervisory board merely
giving recommendations to the Governing Council.
Spanish borrowing costs meantime fell at an auction of 10-Year
bonds this morning, amid speculation that the government is on the verge of
asking for a bailout, which would enable the ECB to buy its bonds on the
secondary market under its Outright Monetary Transactions program.
"The market is still looking for the timing of the aid
request," says Harvinder Sian, rate strategist at RBS, speaking before the
auction.
"The danger is that if the market continues to rally the
Spanish government holds off [requesting a bailout]."
Over in Greece, unions have called another general strike today
to coincide with the start of the EU summit, with protesters once again taking
to the streets of Athens.
Cyprus meantime has had its credit rating pushed further into
junk territory by Standard & Poor's, which now rates the country's debt at
B. Cyprus too is widely expected to seek a bailout soon.
In South Africa, the world's fifth largest gold bullion producer
Gold Fields is set to fire 11,000 workers for taking strike action, Reuters
reports. Gold Fields said yesterday that a strike at some of its Beatrix shafts
has ended, but that other sites are still being affected by industrial action.
Ben Traynor
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+
Please Note: This article is to inform your
thinking, not lead it. Only you can decide the best place for your money, and
any decision you make will put your money at risk. Information or data included
here may have already been overtaken by events – and must be verified elsewhere
– should you choose to act on it.
