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Gold Prices Split in Dollars, Pounds and Euros as UK Gets 4th PM in 6 Years, Germany's Factory Orders Sink

GOLD PRICES held firm in US Dollar terms, rose against a falling Euro, but slipped for UK investors on a bounce in the Pound on Tuesday morning in London as the world's now 6th largest economy got its 4th new prime minister in a little over 6 years.
Trading at $1712 per ounce, the price of gold in Euros rose to €1725 as the 19-nation single currency fell further below parity with the Dollar after marking that 2-decade low on the foreign exchange markets in mid-July.
With the UK now widely recognized as surpassed by India as the world's 5th largest national economy, the British Pound in contrast rallied by 1.5 cents from yesterday's near 4-decade low of $1.14435 against the Dollar as former anti-monarchist and anti-nuclear activist Liz Truss became UK Prime Minister, elected by less than 58% of the Conservatives' 170,000 membership to replace disgraced journalist and former London mayor Boris Johnson as leader of the largest party in Parliament.
"They changed the rules half-way through but never mind that now," said Brexit champion Johnson – labelled an habitual and compulsive liar lacking integrity by some opponents, colleagues and Tory party grandees as well as opinion polls – on exiting 10 Downing Street today, a little over 3 years after ousting colleague Theresa May as PM.
"I know that Liz Truss and this compassionate Conservative government will do everything we can to get people through this crisis."
The rally in Sterling saw the UK gold price in Pounds per ounce drop almost £25 from yesterday morning's 2-month peak near £1500 before rallying back towards £1480.
That put the UK price of gold a little over 5% below its record peak of March 2022, contrasting with a near-8% drop for Euro gold and a 17% drop from August 2020's peak in US Dollar terms.
Chart of gold priced in USD, GBP, EUR (rebased to 100 = July 2019). Source: BullionVault
With Truss widely expected to announce £130 billion or more of new borrowing to fund an energy-bill loan capping prices for UK consumers and possibly business, the UK state's borrowing costs have now risen for 6 weeks running on the bond market.
The longest stretch since autumn 2021 and only the 7th such run of the last decade, that has taken 10-year Gilt yields up towards 3.00% per annum, the highest since end-2013 and the highest in Western Europe today outside of Italy (3.90%) and Greece (4.16%).
Despite a small rally Tuesday however, the price of both Germany and France's government bonds has also now fallen for 6 weeks running, driving the annual cost of borrowing for 10 years up to 1.53% and 2.16% respectively for Berlin and Paris.
The Japanese Yen meantime fell to its lowest Dollar value since 1998 on Tuesday, tracking an overnight rise in government bond yields after the Reserve Bank of Australia hiked its overnight interest rate by half-a-percentage point for the 4th month running – a global trend which the Bank of Japan continues to buck.
RBA governor Philip Lowe should resign, said one opposition politician today, because as recently as last October Lowe repeated that the RBA wouldn't raise interest rates until 2024, and that "effectively induced lots of Australians to taking on massive debt levels" in the mortgage market.
The drop in Japan's Yen today helped the price of gold in JPY to reach 2-month highs above ¥7,820 per gram, less than 5% below April's all-time record gold in JPY high.
With Truss meeting the Queen to accept the role of UK Prime Minister, the FTSE100 index of London-listed but mostly international corporations held flat on Tuesday, while the UK-focused FTSE250 index rallied 1.2% but held near 2-year lows.
Frankfurt's Dax index of German-listed shares meantime rose 0.9% as the Euro slipped following news that new factory orders in the Eurozone's No.1 economy cratered by almost 14% per year in July.

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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