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Gold ebbs from three-week high on fears of drooping physical demand

It was a non-descript day for gold, with the price of the most actively traded futures contract ebbing from its three week high on concerns over physical demand for the yellow stuff.

The front month futures contract slipped US$2.30, or 0.21%, to US1,347.40 on the COMEX division of the New York Mercantile Exchange, after it was reported that gold holdings in exchange traded funds fell three tonnes to 1.886.2 tonnes yesterday.

The spot price, however, hardened 42 cents to US$1,347.17, as a research note from UBS suggested that gold jewellery stocks in India are likely to be exhausted before the Hindu holiday Diwali.

India is the world’s largest consumer of gold, and it is common practice in the country to give gold as a gift at holiday time.

“The view is that stocks from the large buying volumes in the second quarter have been run down as imports dried up in the second half of the year amid the challenging regulatory environment,"said UBS precious metals analyst, Joni Teves.

The futures market for silver was softer still. Silver for December delivery declined 28 cents (1.21%) to US$22.55.

On the corporate front, Centamin (LON:CEY) has sold more shares of AIM-listed Nyota Minerals (LON:NYO), reducing its stake from 17.2% to 16.1%.

The FTSE 250 gold miner sold 2.7mln shares on Monday at just over 1p each and 6.7mln shares at 0.865p the following day.

Centamin is still Nyota’s largest shareholder, but has been offloading stock lately.

Major movers

Nyota Minerals -8.7% at 0.69p
Kalimanta Gold -8.0% at 2.88p
SolGold +21.0% at 10.5p


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