Gold News

Gold Price Loses $1200 Mark as US Jobs Data Say Fed is "Ahead with Results, Behind on Rates"

GOLD PRICES fell 0.8% in two minutes Friday lunchtime in London, dipping through $1200 per ounce – a new 2014 low – as new US jobs data beat analyst forecasts.
 
The US Dollar jumped on the currency market, knocking almost 1 cent off the Euro to reach new two-year highs.
 
Gold priced in US Dollars then slipped further to $1196 as silver hit new 5-year lows at $16.81.
 
Faced with today's strong NFP report, says Standard Bank's London team in a note, "we would have expected gold to move another $15 and silver another $1 lower.
 
"Surprised both are holding very well."
 
Reporting 248,000 net new jobs for September against consensus forecasts of 215,000, today's Non-Farm Payrolls data put the US unemployment rate for last month at 5.9%.
 
That's the lowest level since before Lehman Brothers collapsed in September 2008.
 
"Macroeconomic outcomes have exceeded expectations," said James Bullard, president of the St.Louis Fed – and a voting member next year and 2016 – in a presentation Thursday.
 
"Yet the Committee has not proceeded with liftoff...[leaving it] ahead with results, behind on rates."
 
Today's "strengthening payrolls," Bloomberg quotes a pension fund analyst in New York, "are going to add to the perception that the Fed is going to raise rates sooner...[a] negative for gold."
 
"The outlook for higher [US] rates," says Germany's Commerzbank in a note, "continues to suppress demand for gold as safe haven investment."
 
"Gold doesn't earn any yield or return," agrees SocGen's precious metals analyst Robin Bhar in London.
 
"Investors are becoming more disillusioned when it comes to gold.”
 
Bullion held to back shares in the SPDR Gold Trust – the world's largest exchange-traded fund by value at its 2011 peaks – slipped again on Thursday to reach new 6-year lows at 767 tonnes, down over 45% from end-2012.
 
But looking at speculative bets against gold prices in US futures and options, "The market is very short and a bad number [would] see a sharp short covering rally," said a London brokerage ahead of the NFP report.
 
Heading for a 1.5% weekly loss in Dollar terms, gold by Friday afternoon stood only 0.3% lower in Euros and virtually unchanged against the British Pound or Swiss Franc.
 
Despite China's continuing Golden Weeks holidays, Asian traders saw "good buying" overnight according to one trader, as gold prices held above $1210.
 
The Shanghai Gold Exchange will re-open on Wednesday next week.
 
Pro-democracy campaigners in Hong Kong meantime threatened today to pull out of talks over with the city's CEO, C.Y.Leung, after fights broke out following 5 days of peaceful street protests.

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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