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Gold Prices End Lower

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Gold prices fell on Thursday as cautious investors wait for some cue from Friday’s U.S. non-farm job data even as Thursday’s job reports threw mixed signals. Whereas ISM non-manufacturing data showed that U.S. service sector created less jobs than estimated, reflecting fragility in the economic recovery;  weekly jobless claims fell short estimations.

U.S equities and other commodities also traded lower n Thursday putting pressure on gold. Lately, the yellow metal has tracked riskier assets like equities, and oil markets.


Spot gold ended lower by nearly 1 percent at $1,636.40 an ounce on Thursday.

U.S. gold futures for June delivery slid more than 1 percent to settle at $1,634.80 an ounce.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 1.01% lower at $158.97.

Any weakness in the U.S. economy normally weighs on dollar, thereby increasing gold’s investment appeal as opportunity cost to hold the metal reduces. However, the gains were limited as euro was quick to pare its earlier gains after ECB President failed to provide any encouraging comment over monetary easing measures like bond buying program, aimed at boosting deteriorating euro-zone economy.

The ECB kept the benchmark interest rate unchanged at 1%. Despite the series of low interest rates, the euro-zone has continued to simmer under sever debt crisis.

Spain, Europe’s fourth largest economy witnessed its economic activities contracting in previous two quarters as country’s most large banks struggle with maintain sufficient liquidity amid rising unemployment and falling investments.

On Thursday, although both France and Spain successfully ended debt auctioning, the cost of borrowing soared for later.  Experts now fear that debt contagion could spread in the Netherlands as country finds it difficult to adjust its high fiscal deficit amid recession.

On Friday, after a series of mixed data on U.S economy, all eyes will be focused on April’s non-farms jobs report. Gold investors are hoping that any weakness in the data might prompt the Federal Reserve to provide some kind of quantitative easing.

“The focus for the next 24 hours will be the jobless report tomorrow, the (jobless) claims were a bit lower than expected and could have done some of the damage,” said Ole Hensen, Vice President at SAxo bank to Reuters.

Gold has been hovering between $1,630 and $1,670 an ounce since late February as fed’s less dovish monetary policy weakened the investors’ interest in the metal.

So far this week gold lost 1.4%, touching its lowest on Thursday. The sharp retreat prompted many shorter-term speculators and longer-term investors to cut short their positions on the metal both in the futures market and in exchange traded funds (ETFs).

According to a data provided by Reuters, holdings of gold in the world’s largest ETFs have plunge by nearly 1 million ounces after hitting a record high of 70.89 million ounces on March 16.

Meanwhile, ETFs have lost 576,575 ounces of metal over three successive months, marking their heaviest  string of  net outflows since early 2010, when holdings dropped by 1.88 million ounces in three months.

In some other precious metal markets, silver dropped 1.76 percent to close at $30.09 an ounce.

Platinum slid 1.73 percent on the day to settle at $1,529.99 an ounce, and palladium also edged down by 1.4 percent to end the day at $660.10 an ounce.

According to a report on Thursday from metals consultancy Thomson Reuters GFMS, the palladium market registered its largest surplus in five years as strong supply from one of the biggest palladium suppliers -Russia along with outflows from exchange-traded funds offset a surge in demand from the auto-industry-which was at 11 year high.

The surplus in the platinum market almost doubled last year to its highest in two years as the euro zone debt crisis weighed on the global economic growth, resulting into  a more volatile price environment that curtailed some investor demand for both metals.

 

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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