"WHOLESALE PRICES in Asia and London for physical gold slipped again Thursday morning, dipping back below $1300 per ounce as politicians in Washington mulled a short-term fix to avoid the $17 trillion debt ceiling triggering a government default in one week's time.
Silver also eased back, trading below $22 per ounce, as world stock markets rose and major government bonds slipped, nudging 10-year US Treasury yields up to 2.70%.
Legal inflows of gold to India – the world's former #1 consumer nation – have been so dented by the government's anti-import rules that the country's trade deficit shrank to a 30-month low in September, officials said yesterday.
"This is working out as the government intended," the Financial Express quotes commerce secretary S.R.Rao after India's monthly trade deficitcame in below $6.8 billion for the first time since April 2011.
Many Indian households have turned to silver says the Economic Times, with silver imports already doubling 2012's full-year total over the Jan-Aug. period at 4,073 tonnes according to Thomson Reuters GFMS.
Households in central China's Hubei province have meantime grown their gold and silver jewelry demand 41% by value so far this year, the Xinhua agency reports.
The region's private demand totalled the equivalent of $1.3 billion despite the sharply lower prices compared with the first 8 months of 2012.
Here in London today, the Bank of England followed the US Fed, European Central Bank and Bank of Japan in voting for no change to current policy, holding interest rates at record lows and maintaining its £375 billion ($600bn) quantitative easing gilt-buying scheme.
"[US Fed] tapering has been postponed not canceled, and is expected by year end," wrote Morgan Stanley analysts earlier this week, adding that Washington's "political stalemate" over the debt ceiling will soon be resolved.
"Consequently, we see little immediate upside to the gold price either in the immediate future or next year."
"We recommend staying away from gold," said Morgan Stanley analyst Joel Crane overnight, repeating the investment bank's 2014 average forecast of $1313 per ounce".
Adrian Ash
Bullion vault
