GOLD PRICES slipped near 1-week lows at $1207 per ounce in London trade Monday, dropping 1.3% from the highest Friday finish in 7 weeks ahead of this week's key US Federal Reserve announcement.
Asian and European stock markets slipped overall once again, but European Brent crude prices rallied from last week's new 5-year lows while US oil slipped further below $60 per barrel.
Major government bond prices fell hard, pushing longer-term yields higher, on what Bloomberg calls "speculation" that the US Fed will drop its commitment to keeping Dollar rates at zero "for a considerable time" when it announces policy on Wednesday.
"Despite tumbling crude oil prices," says South Africa's Rand Refinery in a note, "the price of gold has held rather well and remains above the $1200 an ounce level."
But also looking at Dollar gold prices, "A retracement towards $1168 looks plausible," says the technical analysis team at French investment bank and London bullion market maker Societe Generale.
"Only a decisive break above $1240 will mean an extension in the recovery."
"News of a terrorist siege/hostage situation in a Sydney cafe had little impact on markets today," says a note from Swiss refining group MKS's Asian trading desk.
Looking at upcoming data releases, "Nothing will be of any particular consequence ahead of the [US Fed]meeting this week," says broker Marex Spectron's London bullion head David Govett.
Silver prices twice fell on Monday to rally off $16.80 per ounce, a new 5-year low when first reached in October.
The Russian Ruble fell to 60 per Dollar for the first time, down by one-third from September.
"Potentially bullish for gold," says a note from US brokers INTL FCStone, "there might be mounting credit issues associated with Dollar debt raised by Russian companies, many of them in the energy space."
Shanghai gold prices held flat in Yuan terms by the close today, extending their premium over London quotes to $1.90 per ounce.
Indicative of Chinese wholesale demand for importing metal, the last 3 months' average premium to London gold is nearer $2.40 per ounce.
Shanghai Securities News reports that jewelry sales in the major city of Shenzen have dropped 40-50% in the last year.
Leading jewelry manufacturer and retailer Chow Tai Fook last month reported a 41% drop in half-yearly gold sales.
With the Chinese New Year set to mark the peak of household gold demand in mid-February 2015, latest Chinese manufacturing activity – a key report for traders watching the growth rate of the world's second largest economy, and its No.1 gold producer and consumer – is due for release with HSBC bank's PMI data overnight.