Investors fretted about the weakening state of China's highflying economy
Bullion prices failed to score any gains on Monday, 24 August 2015 despite its reputation as a refuge in times of market turmoil, while other metals took a hit on the latest rout in global stock markets. Investors fretted about the weakening state of China's highflying economy, souring the demand outlook for industrial metals. Gold prices ended the U.S. futures trading session modestly lower in a wild trading day in the market place Mondayalthough the gold market did not see high volatility. The yellow metal did hit a six-week high in morning dealings, after the U.S. stock market sold off sharply right at the opening.
Gold for December delivery lost $6, or 0.5%, to settle at $1,153.60 an ounce.
Silver for September delivery shaved off 53.9 cents, or 3.5%, to $14.762 an ounce.
Gold prices lost altitude just before midday when the U.S. stock indexes bounced well up from their early spike lows. Gold was also pulled to the downside by the major sell-off in the raw commodity sector recently, led by crude oil prices touching a six-year low on Monday. Nymex October crude oil futures traded to a low of $37.75 a barrel on Monday.
On Monday, the Dow Jones Industrial Average at one point shortly after the open was down more than 1,000 points. China's Shanghai index was down over 8% overnight and is now in negative territory for the year. Monday's plunge in the China stock market is the largest one-day drop since the financial crisis that began in 2008. There are news reports that China's central bank is ready to inject massive liquidity into the Chinese financial system in order to increase lending and stop the sell-off in China equities. The world market place is worried about a slowdown in China's economy, which is the world's second-largest.
Japan's Nikkei stock index was down by nearly 5% on Monday. European stock indexes were down around 3% on the day, at their worst levels, before rebounding by the close. The market place is concerned about a world financial market contagion setting in.
Secondary world currencies also shuddered Monday, as cash is flowing out of the periphery currency markets and into perceived safer-haven currencies and assets.
All of the above have called into serious question the ability of the Federal Reserve to raise U.S. interest rates any time soon. Later this week U.S. Federal Reserve officials meet in Jackson Hole, Wyoming for their annual meeting to discuss monetary policy and other economic issues.
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