LONDON (Commodity Online): Prices eased across the complex again yesterday, this time led by losses in palladium, amid thin liquidity given the US holiday today and as markets were weaker around the world, unnerved in part by a failed Bund auction that highlighted the risk of yet further contagion from peripheral Europe to financially stronger European sovereigns.
French, German and Italian bond markets weakened while economic data was weaker than expected in the US, Europe and China. Gold prices suffered the smallest losses across the complex, falling by 0.4% to close at $1692.4/oz as equity markets weakened and the dollar strengthened against the euro to levels last seen in early October.
Investor interest in gold remains stable with physical ETP holdings at record highs. Perhaps more importantly central bank buying has continued in October following the stronger than expected buying in Q3 11 reported by the World Gold Council.
Dow Jones reported the latest IMF statistics for October showed there was net buying of around 20 tonnes. Central bank buying materialised from Kazakhstan (3 tonnes), which had reported earlier in the month it was looking to increase reserves through purchasing domestic gold production, Russia (19.5 tonnes), Belarus (1 tonne), Colombia (1 tonne) and Mexico (1 tonne) as well as small buying elsewhere. There were also net sales from Tajikistan (-0.4 tonnes) and Germany (4.7 tonnes).
Germany has historically sold gold for the purposes of coin production and was indeed reflected by commentary on the ECB website that stated “sale of gold commemorative coins by one Eurosystem central bank”.
