Gold News

Gold Prices Drop Weekly Gain as US Jobs Data "Defy Cold Weather", Moscow Rebukes EU Over Ukraine, Shanghai Premium Ends Negative

GOLD PRICES fell sharply Friday lunchtime in London, dropping 1.1% inside 5 minutes of new data showing US jobs hiring was much stronger than forecast in February.
 
Losing another 0.5% over the next hour, gold prices dropped three-quarters of the week's earlier $27 gain per ounce, finally bouncing higher from $1330.
 
"Cold weather is likely to deliver another poor payroll number," Deutsche Bank analysts said ahead of the official Non-Farm jobs report, "and sustain the strength in the gold price."
 
"That these numbers came even while weather was bad shows the underlying strength of the US economy," the BBC quotes Scotia Capital FX strategist Camilla Sutton.
 
US Treasury bonds fell after the US jobs data – driving 10-year rates up 6 basis-points to a 3-week high at 2.80% – and the US Dollar index rallied from new 4-month lows on the currency market.
 
The Euro, having been flat at $1.3725 mid-week, and then flat at $1.3850 after Thursday's weaker-than-expected US productivity and factory orders data, today rose above $1.3900 – its highest level since Oct.2011 – before dropping half-a-cent.
 
Euro gold prices gave back the last of this week's earlier 2.5% gains, falling back to €962 per ounce – a level first achieved in May 2010 as the Eurozone debt crisis worsened.
 
"Russia will not accept...sanctions and threats" from the European Union, Moscow said today, responding to trade and financial blocks proposed by Brussels over the Ukraine crisis.
 
"The proposed referendum on the future of Crimea would violate the Ukrainian constitution and violate international law," said US president Obama late Thursday, a comment repeated Friday by Ukraine's interim president Turchinov.
 
Destroyer USS Truxton today entered the Black Sea, reportedly heading for exercises with the Romanian navy.
 
Any "positive effect on the gold price from an escalation in geopolitical risk," Deutsche Bank's earlier note said, "typically fades rapidly.
 
"However, if there were international efforts to impose sanctions on Russia, then this could start to impact the [platinum group] sector, and specifically palladium."
 
With strikes at South Africa's platinum mines likely to start impacting global supplies, according to London analysts, "Platinum is holding at the recent breakout highs and maintains a bullish 'reverse head & shoulders' base," reckons technical analysis from Credit Suisse.
 
The gold price this week "rallied back to test trendline resistance from May 2013," the Swiss investment and bullion bank said, pointing to $1352.
 
"The risks are for an eventual extension through [there] to challenge targets at $1362/66" – the gold price high of last October.
 
Meantime in Asia, Shanghai gold premiums to the international price ended the week sharply negative, more than $3 per ounce below London settlement.
 
"It has been a mixed week," Reuters quotes a Singapore gold bullion dealer, with clients selling above $1350 only to buy back around $1330.
 
A local retailer quoted separately says consumer demand tailed off when spot gold prices broke above $1320 late last month. 
 
Some consumers "were selling scrap" says the news-wire.

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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