Gold News

Gold Price Falls as US Jobs Market Grows, China Adds 16 Tonnes of 'Volatile, Non-Yielding' Bullion

GOLD BULLION prices fell to 2-week lows in London trade Wednesday after new US data showed jobs hiring stronger than analysts forecast.
 
Dropping to $1119 per ounce – a level identified by several bullion analysts as today's 'moving average' of the last 2 months' prices – gold bullion fell as the US Dollar gained on the FX market.
 
Payrolls service provider ADP said US companies added a net 200,000 jobs this month, lagging the pace of last September but beating analysts' average forecast by 2.5%.
 
The US government's non-farm payrolls estimate for September is due out Friday.
 
The People's Bank of China meantime said it grew national gold reserves by 1.0% in August, taking the total above 1,693 tonnes.
 
Buying 16 tonnes in August, the PBoC grew its reserves at twice the average monthly pace of accumulation between 2009 and 2015.
 
But the State Administration of Foreign Exchange also said today in a semi-annual report that Beijing's bullion holdings are now large, and expose it to what SAFE sees as gold's price volatility, small market size, heavy storage costs, poor liquidity, and zero interest payments.
 
"Not exactly an advert for gold," writes strategist Tom Kendall at the Chinese-owned ICBC Standard Bank in London, "and not really supportive of the gold-bug conspiracy theorists who suggest China's official holdings are much higher than the PBoC reports."
 
Shares in giant mining and commodities trading group Glencore (LON:GLEN) meantime rallied for a second day, recouping most of Monday's shock 29% plunge.
 
Bloomberg reports rumors that, in its bid to cut the group's $30 billion of debt, Glencore is now looking to finance future gold and silver output from its South American operations in so-called "streaming" deals.
 
"Analysts say Chinese companies would be most interested in the Swiss trader’s copper mines," the newswire adds.
 
But overall, "The current turmoil in commodities is clearly weighing on gold," adds another bullion bank's sales desk, "especially as physical demand (India, China, Middle East) is absent and inflation remains lackluster."
 
Trading on the Shanghai Gold Exchange fell sharply today ahead of the week-long National Day holidays starting Thursday.
 
For US Dollar price, "Dips should find initial support circa the 55-day moving average at $1119," says a technical analysis from Germany's Commerzbank, "ahead of the 2-month uptrend [now] at $1101.69."
 
With official US non-farm payrolls data due Friday, "I suspect we will stay range bound until then," the Wall Street Journal quotes David Govett, head of precious at brokers Marex Spectron in London.

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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