Gold News

Gold Price Sinks to 3-Week Low on Strong US Jobs Report, Asia's 'Bargain-Hunting' Down as London Vault Exports Drop, New York's GLD Inflows Hit Peak Crisis Levels

GOLD PRICES sank at the start of New York trade on Friday, dropping 2.5% to hit 3-week lows beneath $1235 per ounce after new US jobs data came in much better than analysts forecast.
 
The Non-Farm Payrolls report for January estimated last month's net US jobs growth at 257,000 against Wall Street's consensus for 234,000, with December's figure revised 30% higher to 329,000 – the second-best month since June 2010.
 
The US unemployment rate ticked higher to 5.7% however, as 703,000 people were estimated to have joined the labor force.
 
"The better than expected figures quickly saw gold retreat...having a battle," said a note from London dealers Standard Bank's commodity unit, now owned by China's giant ICBC Bank.
 
Now halving 2015's previous 10% gain of late January, gold priced in Dollars fell almost $15 per ounce within two minutes.
 
Gold priced in Euros also tumbled, breaking below Tuesday's 3-week low at €1091, even as the single currency fell hard against the Dollar.
 
Friday's new UK trade data said gold bullion exports, net of imports, totaled 468 tonnes in 2014, two-thirds below 2013's record outflow from London's specialist bullion vaults – the central storage point for wholesale Good Delivery bars dealt worldwide.
 
Gold demand in China – the world's No.2 consumer nation behind Indian – fell 25% from 2013's record to 886 tonnes last year, the China Gold Association said today.
 
China's gold mining output – the world leader since 2007 – rose 5% to 452 tonnes, the government-approved industry association added.
 
"The precipitous drop in prices in 2013," says the China Gold Association, "led to an increase in demand of extraordinary proportions.
 
"[But] the relatively stable price in 2014 suppressed investment demand."
 
"Last year," says Kim An-mo of Korea Gold Exchange 3M, which reports turning over $700m in its last financial year, " investors bought gold in bargain hunting as the metal's price was declining.
 
"But now they buy gold to avoid possible financial losses related to territorial disputes, possible defaults in debt-ridden countries, falling oil prices and record-low interest rates."
 
Thursday saw the New York-listed SPDR Gold Trust (NYSEArca:GLD) add more metal to back the value of its shares for the 10th day in three weeks – a pattern only seen or bettered after the Lehmans crash in October 2008, the stock-market lows and start of US Fed QE in February 2009, the first Greek crisis of May 2010, and the approach of QE3 in the US in late 2012.
 
Extending its heaviest inflows since August 2011, the metal held to back GLD shares has now recovered almost 10% from the fresh 6.5-year lows hit at New Year 2015.
 
The GLD's backing remains 40% below that ETF's end-2012 peak by weight, and 60% down by value from its Dollar peak.
 
"The fact that [Western] ETF investors and funds have been buying is very noteworthy," says a new monthly report from London market makers Scotia Mocatta's New York office.
 
"[So too] is the fact that gold prices have been able to rise while the Dollar is strong and oil is weak."

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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