Gold News

Gold Price Loses 1.3% Spike on US Jobs Data, Silver Back Below "Downtrend Resistance"

GOLD PRICE gains of 1.3% made inside 5 minutes were soon given back Wednesday afternoon in London, with the metal retreating from 1-week highs at $1274 per ounce as US stock markets fell despite decent data.
 
The private-sector ADP report – a proxy for Friday's official non-farm payrolls data – showed 175,000 net jobs created last month, just shy of consensus forecasts.
 
The Markit PMI measure of services sector activity and the ISM index of non-manufacturing growth both then came in better than expected.
 
The US Dollar briefly sank to ¥101, the 12-week low now hit 3 times this week against the Japanese Yen. The US currency also lost and then immediately recovered half-a-cent to the Euro.
 
Euro gold price quotes jumped to €940 per ounce, a new 11-week high.
 
Already on track for the best weekly rise since end-December, wholesale prices for large silver investment bars jumped above $20 per ounce on the US jobs data, reversing the last of January's near-5% drop before cutting the jump in half at $19.91.
 
"The metal remains vulnerable," Swiss bank UBS had earlier said in a note Wednesday, "as long as resistance holds at 19.95," pointing to the downtrend marked by "connecting the August/October 2013 highs."
 
In broader financial markets, "'There [were] some signs of stabilization" said one futures broker to Bloomberg late Tuesday.
 
''The gold price rally seems to be running out of steam.''
 
"Gold [is] not quite such a glittering investment," said the UK's Daily Mirror tabloid online, pointing to 2013's drop of 28%.
 
In his new monthly outlook, "Our Pimco word of the month is to be 'careful'," writes Bill Gross, co-founder of the $2 trillion California-based fund management group.
 
"3-4% credit expansion in the US may not be enough to maintain 3% growth, especially if asset prices go down. [ Beware the] highly levered global marketplace. There is risk out there."
 
"Short-term," says US brokerage INTL FC Stone, "we think that the correction in the US stock market likely has more room to go and that the turmoil in emerging-market currencies is not yet over.
 
"Both these variables should provide the gold price with enough momentum to push higher."
 
London-based consultancy Metals Focus "do[es] not see the run on EM markets heavily affecting gold consumption in China and India," says its latest Precious Metals Weekly.
 
Between them, the world's top two gold consumer nations "accounted for over two-thirds of total EM jewelry and bar demand in 2013," says the report, adding that China's Yuan looks solid on a strong trade balance, while recent Indian data "suggests that the worst is probably behind us."

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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