GOLD PRICE losses of 4.1% for the week were cut by one third late in London trade Friday, as the price jumped back above $1200 per ounce.

 

After Comex gold futures closed Thursday at new three-and-a-half year lows, trading volumes on the Shanghai Gold Exchange had earlier hit 10-week highs on the 2.1% overnight drop in Yuan gold prices.

 

Gold prices then rallied $10 per ounce during Asian trade, hitting the $1197 level seen again after New York opened.

 

Although plainly "price takers" and not "makers" in 2013, "Emerging markets – and especially China – have a growing impact on 'paper markets' for gold," said Phillip Klapwijk of Precious Metals Insights at this month's China Gold Summit in Shanghai, "Both through trading on domestic exchanges (for instance the Shanghai Gold Exchange and the Shanghai Futures Exchange) and also indirectly via the loco-London market."

 

Interbank lending rates in China meantime surged once again, taking the interest on 7-day loans above 8% annualized, despite the People's Bank announcing an emergency injection of cash on Thursday.

 

"If it's true what everybody is saying, that the bank injected 200 billion Yuan [$33bn]," Reuters quotes a Shanghai bank trader, "and this wasn't enough to fill the hole, it must be enormous."

 

Over in Tokyo, "The Fed's tapering of its asset purchases [on Wednesday] is basically because the US economic recovery is proceeding well," said Bank of Japan governor Haruhiko Kuroda at a press conference Friday morning.

 

Friday saw the United States' third-quarter GDP revised up to 4.1% annualized growth.

 

Kuroda's team today voted unanimously to continue with Japan's zero-rate policy and ¥60 trillion ($575bn) per year of quantitative easing.

 

"If you look at the global economy and the outlook for monetary policy," reckons Andrew Cole of Baring Asset Management, "we are going to need a much bigger problem than we foresee for gold to recapture any of its lustre."

 

"The reasons to own gold have just evaporated," says Jeffrey Sherman of the $53bn DoubleLine Capital asset managers in Los Angeles, quoted by the Wall Street Journal.

 

DoubleLine "sold its gold holdings at a loss after a steep drop in prices this past spring," the WSJ says.

 

"We're still in the process of bottoming out in the gold mining sector and in the physical market," said World Gold Council director Marcus Grubb to CNBC yesterday.