Gold is trading a bit in the red this morning as trader’s book profits from the metals mini rally on Friday after the nonfarm payroll release. Gold is trading at 1293.90 down almost $1 as the day begins. Gold was supported above $1,290 an ounce on Monday as surprisingly weak U.S jobs data diminished fears the Federal Reserve will raise interest rates soon, and as weaker stocks prompted some safe-haven bids. Hedge funds and money managers cut their bullish bets on gold futures and options as the yellow metal’s prices fell in last week, the Commodity Futures Trading Commission said. Violence and geopolitical tensions in the Middle East and Ukraine also supported gold, which is seen as an alternative investment to riskier assets such as equities. The data supports Fed’ view that a significant labor market slack remained, signaling the need for patience on the rate front. Gold prices are expected to move in a range to down for the day. The economics calendar is bare today outside of Australian retail sales which beat expectations.
Precious metals fell again during last week until Friday when the non-farm payroll report showed a gain of 203K in jobs – less than market expectations. Earlier this week, the FOMC decided to taper again its QE3 program and had a slightly more hawkish tone to its press release. The GDP for the second quarter was also published and presented a gain of 4% – a 180 degree shift from the first quarter. These news items may have been enough to pressure down precious metals prices.
But how will this week play out in the headlines, no one knows?
This upcoming week, the ECB will decide on its interest rate for August. In Japan, Australia and England the central banks will also convene to decide on their respective cash rate. In the U.S the trade balance, jobless claims and trade balance reports will be out. In Europe, Germany’s factory orders, trade balance and EU retail sales will be released.
The rally helped gold rebound off a six-week low hit Thursday, amid jitters that stronger economic data would spur the Federal Reserve to speed up its stimulus reductions or raise interest rates sooner.
Recent losses in the stock market also lent gold support, as some investors moved to re-assess gold’s allure as a haven asset, he added. The Dow Joneserased 2014′s gains in a steep tumble on Thursday, while the S&P 500 index also posted a large decline. Silver and Platinum have diverged from gold this morning both trading in the green with silver up 32 points at 20.403 and platinum at 1465.80.
Copper recovered a bit of its decline on Friday to trade at 3.218 up by 3 points this morning after falling from last week after it almost set a new high bucking the 3.27 level. Copper was a tad firmer today after a weak jobs report soothed concerns that the United States would soon begin to draw back liquidity that has cushioned metals demand. Manufacturing activity in China and most of Asia gathered pace in July, while expansion slowed in Europe but remained healthy in the United States. As global banks and trading houses fire off lawsuits over their estimated $900 million exposure to a suspected metal financing fraud in China, the tangled legal battle to recoup losses is set to drag on for years and hinder a swift recovery in metal trade.
