Asian and European stock markets meantime turned sharply higher, led by financial shares buoyed by J.P.Morgan’s revised five-fold offer for Bear Stearns.
US government bond prices also pushed higher, sending interest rates down as the US Dollar and Japanese Yen fell together.
And to complete the apparent "situation normal" of the last five years – minus only private equity bids & surging real estate prices, with unlimited central-bank lending thrown in to support the money markets – broad commodity prices also turned higher, taking US crude oil futures back above $101 per barrel.
"The roller coaster continues," said one Asian economic forecaster to Reuters earlier, after Hong Kong enjoyed a 6.4% gain and India’s Sensex rose by more than 8%.
The Nikkei index in Tokyo gained 2.1% as the Japanese Yen slipped back on the currency markets, reaching ¥100.50 per Dollar.
The Dollar also continued to slip against the rest of the world’s leading currencies, however, losing 1.5% vs. the Euro to $1.5580 – still some three cents off last week’s record low – and dropping more than 1¢ from Thursday’s two-week high to the British Pound.
Bouncing higher after what Mitsui analysts call last week’s "long overdue correction", the spot Gold Market also broke £469 per ounce for British investors today, some 8% off the record high of Tues 18th March.
For French, German and Italian investors wanting to Buy Gold today, however, the price struggled below €599 per ounce, virtually erasing this year’s gains-to-date.
"Conditions in the Gold Market remain uncertain," says Standard Bank in its daily note, "with the macroeconomic forces that caused the recent rally in prices starting to ease.
"We see support for gold at $914…A break higher might see gold test $953."
For number-crunchers, Tuesday sees the latest Case-Schiller report on urban US real estate prices, due out at 08:00 EST. It last showed the steepest annualized drop in its two-decade history.
Yesterday’s housing report from the National Association of Realtors showed existing US homes losing value at the fastest pace since 1968.
"The fall in the Gold Price in the past few days met with significant private investor interest in Germany," reports Wolfgang Wrzesniok-Rossbach for Heraeus – the German refinery group based in Hanau – particularly for "larger casted gold bars, usually of 100 grams and upwards."
"The tide of scrap gold, which [our Hong Kong office] witnessed at prices in excess of $980, has ceased," says the latest monthly Refining Monitor from Mitsui, the global metals dealer.
"In Dubai, our friends in the market saw a large amount of gold purchases [last Tuesday] as demand kicked in once gold fell through $970. In India, while demand was elevated…the bulk of possible buyers are still considering new purchases.
"The crucial element for these consumers is volatility," notes Mitsui, adding that Indian gold buyers – who accounted for one ounce in every five sold worldwide last year – usually "shun a market experiencing wild swings."
Indian gold imports in February were barely one-sixth of 2007 levels, notes Wrzesniok-Rossbach at Heraeus. Gold sales in Dubai fell by 15% in Feb. from the same month last year, while Turkish gold jewelry exports dropped 9.5% year-on-year.
Institutional investors, meantime, continued to reduce their gold holdings in the exchange-traded funds on Monday, with the total stock of bullion held by the GLD trust falling another three tonnes to stand 4.5% below last Tuesday’s record high.
Latest data from the US gold futures market, on the other hand, showed that total betting rose 1.5% in the week ending last Tuesday. The biggest increase came in the bullish bets placed by commercial traders, up by 7%.
Often known as the "smart money" – apparently for their knack of getting on the right side of sharp moves in the Gold Market before they strike – the refineries, fabricators and miners who extended their long positions at the start of last week then saw the April gold futures contract drop almost 12% of its value inside two days.
And from the official sector, meantime, the member gold-sellers of the Central Bank Gold Agreement have sold only 191 tonnes so far in this, the fourth year of the CBGA that started in late Sept., the World Gold Council estimated today.
Mid-way through the CBGA year, it believes, the biggest seller so far has been France. With a ceiling of 500 tonnes for the 12 months ending Sept. 26th 2008, the 15 member banks have sold less than 40% of the permissible total so far.
In Beijing today, the China Banking Regulatory Commission (CBRC) said private banks can now apply for a permit to trade gold futures in the domestic market, provided their dealers are suitably qualified and the banks have a capital adequacy ratio of 8% or more.
Private individuals and non-bank institutions have been able to trade Shanghai gold futures since they launched in January.
Now "the commercial banks can offer more liquidity and stability to the market, as they hold huge capital," reckons Hu Yuyue of the Beijing Technology and Business University.