Later today the US March non-farm payroll data will be released. The gold price has dropped lower ahead of the release, as it seems to do every month. This latest reading is expected to be the strongest seen for several months. The payroll data is seen as a gauge for the health of the US economy, more so since the FOMC decided to use unemployment numbers as an indicator in monetary policy decisions.
Forecasts suggest that NFP will come in at 200,000, should the actual number come in short of this then gold’s safe-haven appeal will receive a boost. Should the final number meet or exceed expectations, then gold will no doubt suffer a temporary set-back.
Gold is becoming les reactionary to data that suggests any change in QE, namely how tapering will play out. Gold speculators appear to have accepted the fact that tapering is going on and will continue, meaning the gold price is less likely to react to readings that impact upon tapering decisions.
Soft yuan means soft gold imports
Shanghai gold prices are once again trading at a discount to the London price. Falling demand has meant Chinese banks are importing less gold following festival season. The softer yuan has contributed to the lower demand and therefore fewer imports. Despite lower demand, China is still expected to grow in its influence over the gold price this year as it continues to demand physical gold.
Don’t get carried away by restrictions talk
Discussions and opining over India’s gold restrictions continues, following the governor of the Reserve Bank of India’s comments that the easing of the current-account deficit may allow for a easing of the import controls. A note from UBS said yesterday that easing of restrictions would be welcomed by the market but should be approached with caution, ‘This would mark an important step towards regaining some normalcy in the Indian gold market and is overall a positive for gold. Nevertheless, it is crucial that market does not get carried away by these headlines; no official changes have yet been announced. More clarity is needed on what restrictions are going to be ‘removed’ and/or what type of easing in regulations is on the cards, as well as timings. Importantly, the RBI emphasized that the measures to ease current regulations on the local gold market would be small and would be introduced slowly.’
Since Wednesday’s comments gold premiums in India have fallen from around $30/oz.
Sunken silver finally makes it to the Royal Mint
In some exciting Friday news, The Royal Mint has taken delivery of 48 tonnes of Silver, 70 years later than expected. The ship carrying the silver was torpedoed by German enemies, sinking it on the West Ireland coast. All but one crew member survived. The Royal Mint will strike the silver into 20,000 limited edition coins which will be sold for £30. Every coin will display the name ‘SS Gairsappo’ as a tribute to the 22 years of service paid to the country.