Gold prices spiked at the start of U.S. trading on Wednesday, leaping to 1-month highs as Wall Street's stock market dumped 1.7% at the opening after much weaker than expected U.S. retail sales and factory-gate price data.
The U.S. Dollar index dropped 1.1%, helping gold prices hit $1247 per ounce — a 1-month high — to peak 2.0% above an earlier dip during Asian trade.
Silver prices tracked gold, hitting a 3-week high at $17.80 before reversing the whole move as U.S. equities rallied and slipping back to last week's closing level of $17.40.
Europe's major stock markets meantime held up to 3% down on the day, with Germany's DAX and France's CAC40 both sinking to 1-year lows, some 10% off the start of this month.
Major government bond prices leapt again, knocking more than one fifth of a percentage point off 10-year U.S. Treasury yields, which sank through 2.0% to hit 17-month lows beneath 1.9%.
"There are two views here," Reuters this morning quoted Australia's Macquarie Bank analyst Matthew Turner. "[Either] the current [economic] slowdown is temporary, or this is another big downturn, and the central banks are powerless to stop it.”
"As the markets swing between those two views, you can get big moves in every market. [But] it would be a brave person to say that gold can consolidate."
London's PM Gold Fix came in at $1237 per ounce, some $10 below the sudden spot-market high of 20 minutes before, but the highest Dollar Fix since mid-September.
Today's U.S. data showed producer prices slipping 0.1% month-on-month in September, while retail sales fell 0.3% from August.
Looking at the U.S. Dollar's very strong gains of last month, and its retreat since, "The upside for metals," says a note from South Africa's Standard Bank, "is that should the Dollar [now] depreciate prices are likely to move higher.”
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Crude oil however, "is likely to be a different story," the note adds, "and may struggle to move higher...driven by oil-specific factors such as weak demand and oversupply."
Brent crude oil bounced $2 per barrel on Wednesday from a new 4-year low at $83 per barrel.
For gold bullion, "The Chinese [are] once again modest buyers," says a note from Swiss refining and finance group MKS.
"Demand has declined a little in lieu of [this week's] higher prices, apparent from the lower premiums."
Premiums on Shanghai's most active gold contract held at $2.65 per ounce over London wholesale prices in solid trade on Wednesday.
The premium for high-fineness kilobars — the preferred form for Asian investors – slipped near $1 per ounce on the SGE's new international "free trade zone" contract, iAu9999.
Meantime in India – the former No.1 consumer until strict import controls were imposed last year – legal gold imports rose five-fold last month from Sept. 2013 to equal $3.8 billion.
"The high imports pushed up the India's trade deficit to an 18-month high of $14.2bn in September," says NDTV.
But ahead of India's peak Diwali demand season, such strong imports "are a normal phenomenon," the Press Trust of India quotes All India Gems & Jewelry Trade Federation director Bachhraj Bamalwa, because "jewelers require stocks to manufacture for the festive season.”
Last month's Indian gold imports, adds the Economic Times, were "slightly less than what was imported in June," after the new BJP government under Narendra Modi eased some of the import controls by renewing licenses to so-called "star trading houses".
