GOLD BULLION halved an earlier 2.0% rally from new 6-week lows on Thursday in London as world stock markets crept to new record highs and the Euro whipped on the FX market following Greece's formal request for an extension to its current bail-out loans.
Gold prices had earlier "reacted to the more dovish" minutes from the latest US Federal Reserve policy meeting, released late Wednesday, according to one London bullion bank.
But "volumes remain light", with China's wholesale demand now absent for the Lunar New Year holidays, marking today's start to the Year of the Goat
Peaking above $1223 per ounce, gold bullion then dropped back to $1207.50 per ounce, but held firmer for non-Dollar investors.
Silver's earlier rally and drop were muted, recovering one fifth of the week's 6% loss, while crude oil prices fell hard after new data showed US stockpiles growing much faster than expected last week.
Germany's Dax rose Thursday above the 11,000 mark for the first time, while 2-year Bund yields fell to new record lows of minus 0.23% per year.
"The recent falls mean that gold needs to work hard to restore a positive outlook," says one Asian trading desk in a note.
"We're expecting stronger demand towards end of Feb/early March," says the London bullion desk of Standard Bank – now 70% owned by China's ICBC bank – "once Far East is back from Lunar holidays and India has a clearer idea of its budget due at the end of Feb."
Gold bullion imports to India, the world No.1 consumer nation,
could double or more in coming months according to industry leaders after the government ended a ban on "consignment" deals.
Imposed in 2013 to counter record-high inflows spurred by gold's 25% price crash, the ban meant wholesalers had to pay for any new shipment in full in advance.
Wednesday's rule-change also allows the import of gold coins to India, but a restriction on their promotion and sale through commercial banks remains.
