Gold News

Gold Trading Spikes on US Jobs Data, China's Shanghai "Premium" at Best in 5 Weeks

GOLD TRADING at the start of New York business on Wednesday saw prices spike $10 per ounce ahead of monthly US jobs data, breaking out from a tight range in London.
 
Gold had earlier rallied from its second visit in two days to a 7-week low of $1278 per ounce in Asian trade overnight.
 
Gold trading prices for physical bullion held firm at $1290 after the new ADP jobs data were released, just lagging consensus forecasts with 191,000 net hires.
 
Taken by some analysts as a guide to Friday's official non-farm payrolls data from the Bureau of Labor Statistics, that private-sector ADP number was some 15% above the last 12-month average.
 
"Most people will wait for the real figures," says a note from brokerage Marex Spectron, saying to "carry on trading the range" in gold prices "in the absence of any news or fresh outside impetus."
 
Trading action in gold prices, agrees the Asian desk of MKS, is "likely to stay range bound into Friday between $1270-1300."
 
Looking ahead to the official US jobs data, the Swiss refinery and finance group also note that although Tuesday's ISM survey showed growth in US manufacturing, "the employment sub-component eased slightly, declining to...its lowest level since June 2013."
 
Meantime in China – the world's heaviest gold buying nation – trading volumes on the Shanghai Gold Exchange were today the lowest in Yuan terms since 28 January, just before the week-long Chinese New Year shutdown.
 
Typically trading at a premium to the international benchmark of London settlement, Shanghai gold has now been at a discount since end-February.
 
"Strong Chinese demand for physical gold is evident," say Australian bank ANZ, "but is not being corroborated by a high Shanghai-London gold premium."
 
With the Chinese Yuan now trading near 2-year lows vs. the Dollar, the Shanghai premium "would calculate to +USD32 per ounce" at current gold prices, ANZ reckons, if exchange rates had held at their last stable level of 2 months ago.
 
Wednesday, however, saw Shanghai gold trading close at a price only 16 cents shy of London quotes – the smallest discount in almost 5 weeks.

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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