Gold News

Gold Prices Drop $15 in 5 Minutes After Strongest US Jobs Data in 7 Years

GOLD PRICES sank after new US inflation and jobs data Thursday, cutting the week's gain to 0.5% and falling below $1300 per ounce – a level first reached in September 2010.
 
Holding some $3 below yesterday's new 1-week peak at $1305, gold prices dropped to $1291 within 5 minutes of the US data releases.
 
While US consumer prices rose at the fastest pace since June 2013 on the official CPI inflation index, new jobless claims fell last week to a 7-year low.
 
Silver followed and extended the drop in gold prices fell, halving the week's gain to Wednesday's 5-week peak near $20 per ounce to trade beneath $19.50.
 
The Dollar rose against all currencies bar the Japanese Yen after the US jobs data, knocking the Euro to its lowest level since end-Feb. at $1.3650.
 
New GDP data this morning showed the 17-nation Eurozone lagging economists' forecasts for Jan-March, with Germany growing ahead of expectations but Italy and Spain shrinking quarter-on-quarter while France's GDP was flat.
 
Then touching new 1-month highs for European investors however, gold prices also sank Thursday lunchtime against the Euro, Sterling and Swiss Franc.
 
"Gold's price action is a little congested," said one Asian dealing desk ahead of Thursday's drop 
 
"A move above $1306 could see some follow-through buying. But for now, it will be hard to generate real interest in gold below $1313 and $1331" – the gold price peaks set this month and last.
 
"Gold's strength is capped by a stronger Dollar and better US data," Reuters quotes Societe Generale's Robin Bhar in London.
 
"When the economy is doing just fine," Bloomberg quotes R.J. O’Brien commodities broker Phil Streible in Chicago, "people don't need to invest in a safe-haven asset like gold."
 
Over in Shanghai, the key Chinese gold contract ended Thursday at a $1.50 discount to London prices, reversing the return to a Shanghai premium of the last week.
 
The People's Bank of China said today it will keep the Yuan currency stable around the current 2-year lows to the Dollar.
 
"There was a huge amount of Dollar sales," the Wall Street Journal quoted a Shanghai FX trader Wednesday, saying that " it's not bad to sell the Dollar at this point.
 
Retail sales of gold bullion and jewelry in Hong Kong fell 30% last week from the same Golden Week holiday period in 2013, according to Haywood Cheung, president of the city's Chinese Gold & Silver Exchange Society.
 
"Last year was something special," Cheung says, pointing to Spring 2013's Gold Price Crash, which unleashed record-high demand from Chinese and other Asian households.
 
"Also, travel is so common now that people don’t have to wait for the Golden Week."
 
Meantime in India, the former No.1 consumer nation overtaken last year by China as anti-godl import rules hit, dealers report growing sales according to the Financial Express, as the late-spring wedding season continues.

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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