Gold News

Gold Bullion Retreats to 6-Year Low as US Jobs Jump, Dollar Rises, 'Demand Muted'

GOLD BULLION prices fell near last week's new 6-year low of $1053 per ounce in London trade Wednesday after new data said US employment grew at the fastest pace since June in November.
 
New York's stock markets held flat as US Treasury bond yields rose from Tuesday's 1-month low of 2.14%.
 
Silver also fell back beneath last week's finishing level, moving below $14.10 in wholesale bullion trade.
 
"Physical demand remains fairly muted," says a note from David Govett at London commodity and bullion brokers Marex Spectron, "and most players seem to be happy to remain on the side lines until the FOMC meeting in two weeks’ time."
 
Gujarat state saw gold imports during the key festival season of September to November fall 83% against the same period last year, reports The Times of India, with silver bullion and jewelry imports falling the same.
 
Shoppers in the key Middle Eastern malls of Dubai "are waiting for prices below $1000" according to some local retailers.
 
Trading volume on the Shanghai Gold Exchange – the sole conduit for private bullion to enter China, the world's No.2 consumer market so far in 2015 – slipped Wednesday to four-fifths of the main contract's last 12 months' average as Chinese Yuan prices edged 0.5% lower.
 
But the premium over London quotes for bullion delivered to China, incentivizing new imports, held firm equal to $3.25 per ounce – some 80 cents higher than the average since December last year.
 
Looking at the Comex gold futures market, "Gold needs to get a close above last week's high of 1080 in order to bring in fresh buying," says a chart analysis from Canadian bullion bank Scotia Mocatta's New York team.
 
"Key downside support is seen at [last week's new 6-year low of] $1053 followed by $1045, the 2010 low. The overall technical picture remains bearish."
 
Gold bullion today retreated to $1056 per ounce after new data from private payroll services provider ADP said the United States added 217,000 jobs in November, the fastest increase since June and beating analysts' consensus forecast of 190,000.
 
With the European Central Bank expected to expand or extend its QE bond-buying program tomorrow – and to take its deposit interest rate further below zero – the US Dollar had already driven the Euro back near 9-month lows beneath $1.06 after new data said consumer-price inflation across the 19-nation currency union slowed in November to 0.9% per year excluding energy and food costs, less than half the ECB's target.
 
"Growth is expected to be weaker in the Eurozone than the US, and inflation lower," writes Chinese-owned investment and bullion bank ICBC Standard Bank's Steve Barrow – "but the differences are not big."
 
If the Federal Reserve does raise Dollar rates from zero mid-month, says Barrow, "We think that the Fed is being a bit trigger-happy.
 
"But we also think that the ECB has panicked a bit in considering further easing now."
 
Speaking Tuesday in California, " Gradual and low is likely to be the new normal" for US interest rates, said Fed governor Lael Brainard.
 
"I would prefer to have more confidence," agreed her fellow 'dove' Charles Evans, president of the Chicago Fed, "that inflation is indeed beginning to head higher.
 
"[But] the exact timing of lift-off is less important than the trajectory...[and the Fed should] raise the target interest rate very gradually...assess[ing] how the economy is adjusting to higher rates."
 
Despite the Euro's lower FX rate Wednesday, the price of gold bullion for German, French and other currency-union investors fell back below €1000 per ounce, a 1.5% drop from yesterday's 1-week high.

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.

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