Gold News

Gold Bullion Pops on Weakest US Jobs Growth Since Jan., Analysts Bearish Ahead of ECB Vote

GOLD BULLION prices pushed higher lunchtime Wednesday in London, as US data showed new job creation in May falling short of analyst forecasts.
 
The US Dollar fell hard against most major currencies, but ahead of Thursday's widely expected Eurozone rate-cut decision from the European Central Bank, the single currency rose less quickly than Sterling or the Swiss Franc.
 
Gold bullion prices for Eurozone investors recovered last week's closing level at €916 per ounce.
 
Breaking out of a tight range around $1245, Dollar gold lagged Friday's finish by $2 per ounce at $1247.50.
 
"Sentiment has turned more bearish in the past week," says a note from Australia's ANZ Bank.
 
"Any recovery will likely be short-lived ahead of the ECB meeting," reckons US brokerage INTL FCStone, pointing to both tomorrow's Euro policy vote and Friday's release of official US non-farm payroll data as "both strengthen[ing] the Dollar and bring[ing] more pressure on gold."
 
Private-sector payroll services firm ADP said today that the US added 179,000 new jobs net in May, missing consensus forecasts of 210,000 with the lowest monthly addition since January.
 
"The job market has yet to break out from the pace of growth that has prevailed over the last three years," says Moody's Analytics' chief economist Mark Zandi.
 
US Treasury bond prices rose for a second day, nudging 10-year yields down to 2.58%, while European stockmarkets extended an earlier fall.
 
"Another quiet day in Asia," said a Hong Kong dealing desk Wednesday morning, "with most market participants awaiting the ECB meeting and non-farm payrolls released later this week before taking on new risk."
 
A stronger Yuan and a slight rise in Chinese gold prices pushed the Shanghai premium to $1.90 per ounce at Wednesday's finish.
 
Following last week's Reuters report of the Shanghai Gold Exchange winning state approval to launch an international bullion exchange in the city's freeport zone, rival newswire Bloomberg today says the SGE's new venture may allow traders to use Yuan held offshore.
 
"It's the ability to deliver onshore that matters," Bloomberg quotes Shanghai-based Gemsha Metals trader Wallace Ng, noting that legal inflows of gold bullion must come through the Shanghai Gold Exchange.
 
So while allowing offshore Yuan to be traded for gold contracts, the leaked plans are "still limited for physical traders in terms of the import quotas" – granted last year for the first time to only two foreign banks, HSBC and ANZ.
 
Meantime in India, the former No.1 gold consumer nation, new finance minister Arun Jaitley is rumored to be considering a sharp cut to gold import duty, says the DNA news site.
 
From the record-high 10% imposed last summer, "We are examining the possibility of a cut" in the import duty on gold bullion "in the range of 2% to 4%," DNA quotes an anonymous source.

Adrian Ash is director of research at BullionVault, the physical gold and silver 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 is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals