Gold News

Mixed US Jobs Data See Gold Prices Slip vs Falling Dollar, 6-Week Low in Euros as Equities Slump

GOLD PRICES fell to 3-day lows against a falling Dollar lunchtime Friday in London, dropping to $1223 per ounce after stronger-than-expected US jobs data.
 
Adding 10,000 more jobs than the 205,000 analysts forecast in March, the US economy however showed a 5.0% unemployment rate on the official Non-Farm Payrolls data, just higher from the month before.
 
Priced in the Euro, gold sank to €1070 – its lowest level in 6 weeks – while Eurozone stock markets extended 2% losses for the day, erasing the week's earlier gain.
 
"We expect any gold price drop to be bought into and be relatively short-lived as the rally remains intact," said a note from London market-making bullion bank HSBC.
 
"[The] correction is likely to be temporary pause," agreed a technical analysis from French investment and London bullion bank Societe Generale this week, pointing to what it calls "symptoms of a larger up move" with short-term support at $1200-1206.
 
"Near-term consolidation continues," says Canada-based Scotiabank's New York team, "with gold trading sideways in a zone between $1208 and $1246."
 
Further ahead, "We think gold continues to hold more upside potential than downside" they conclude.
 
After last month's Consumer Price Index for the 19-nation Eurozone showed a retreat into 0.1% annual deflation, new data today said manufacturing activity across the currency union grew faster than analysts expected in March, but held well below January's near-2-year high on "weakness in core members" Germany and France.
 
Meeting for its next interest-rate and QE decision in 3 weeks' time, "The European Central Bank is likely to see itself forced to continue its ultra-loose monetary policy," says a note from German financial services group Commerzbank.
 
"This should be reflected above all in an increase in the gold price in Euros."
 
UK manufacturing activity meantime held near February's near 2-year low, the Markit PMI survey said.
 
Gold priced in Sterling headed Friday lunchtime for its fourth consecutive weekly fall, trading below £856 per ounce.
 
China's manufacturing sector showed its strongest activity since December 2013 on the government's NBS survey, but continued to shrink for the 13th month running on the Caixin PMI compiled by global data provider Markit Economics.
 
Service-sector companies reported a strong rebound from the New Year's sudden drop to 2012 lows.
 
"No country should devalue its currency to boost exports," said China's premier Xi Jinping at a meeting with US president Barack Obama overnight, repeating comments from foreign ministry spokesman Lu Kang, also attending the Nuclear Security Summit in Washington.
 
The Yuan edged further back Friday from this week's rise to its strongest FX rate against the US Dollar of 2016 so far, denting an overnight peak in the Shanghai gold premium above the world's benchmark of London settlement of $2 per ounce – some 50 cents below the average incentive offered to new imports over the last 12 months.
 
China retained its No.1 spot amongst the world's gold consumer nations in 2015, said the new Gold Focus 2016 from London-HQ'ed analysts Metals Focus on Thursday, but the separate Gold Survey 2016 from Thomson Reuters GFMS said India re-took its centuries-old crown – one of a series of differences between the gold market's 2 major reports.
 
The current wedding season for Muslim couples has seen guests forced to give costume jewelry and electronic goods as gifts, reports the Times of India today from the northern industrial city of Kanpur, thanks to the ongoing strike by the country's jewelry shops in protest at a new 1% sales tax on gold.

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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