Gold Down Over 5% For September

Wall Street eased on Tuesday, with equities posting September losses and quarterly gains, as portfolio managers engaged in end-of-quarter positioning. Asian stocks were mixed on the first day of the fourth-quarter as investors focused on political unrest in Hong Kong and key Chinese data. Beijing ruled last month that it would allow Hong Kong people to elect their next leader in 2017. But the choice of candidates will be restricted to those approved by a pro-Beijing committee – meaning the Chinese government can effectively screen candidates. A rumbling protest campaign ballooned into mass street demonstrations at the weekend. Police responded initially with tear gas and pepper spray, but riot police later withdrew and since early on Monday the situation has remained calm. At least three key parts of the city are being blockaded by protesters, including the central business district.

Growth in China’s manufacturing met expectations in September as large state factories benefitted from steady domestic demand, welcome news for investors. The official Purchasing Managers’ Index (PMI) hovered at 51.1, the National Bureau of Statistics said on Wednesday, a touch ahead of forecasts for a 51.0 reading. A PMI reading above 50 indicates growth on a monthly basis, and a reading below that points to contraction. The survey suggested that demand for goods produced by large state-owned factories was stronger within China than in overseas markets. Today’s data may assure investors that the world’s second-biggest economy, which has stumbled this year, is not doing as badly as some feared. But at the same time, some analysts warned investors against thinking that growth had picked up markedly.

The US dollar continued to gather momentum climbing above the 86 level, while gold fell to trade at 1207.30 giving up over $4.00 in the Asian session. The shiny metal was down about 5.5 percent for the month after hitting a low of 1,206.85 last week. Gold is also on track to post its first quarterly loss of the year, though it is still up about 1 percent for the year. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, is holding 772.25 tonnes as per latest available data on their website.

Silver moved sympathy to gold, as precious metal demand weakened across the sector. Silver is down 134 points trading at 16.923 at a bargain basement price. Silver should see some heavy buying demand at these prices. Platinum also follow cue giving up $15 to trade at 1285.95.

Industrial metals also weakened due to demand from China, high inventory levels and the soaring US dollar. Copper has fallen two more points this morning after yesterday’s plunge and is trading at 3.008 and could easily fall below the $3 price. Copper prices fell to a five-month low on Tuesday after a gauge of Chinese manufacturing activity showed the country’s manufacturing sector expanding at a slower pace than previously thought, stoking worries about demand from the world’s top consumer of the metal. Strength in the greenback is bad news for base metals, which are priced in dollars and tend to be more expensive for investors who use other currencies to buy the metal.