Gold Tumbles On Stronger U.S. Dollar and a Rebound in Stocks

New York (Jan 30)  Gold prices are selling off in early U.S. trading Thursday, pressured by a sharp rise in the U.S. dollar index and by U.S. stock indexes rebounding modestly from recent selling pressure. Spot gold was last down $22 at $1,241, while spot silver dropped more than 2% to $19.12.

World stock and financial markets have calmed a bit amid the recent strains on some non-major world currencies. This has taken a bit of the luster away from the safe-haven gold market. However, it’s likely this matter will be back on the front burner of the market place soon. This week’s FOMC meeting is out of the way and the continued $10 billion reduction in monthly bond-buying by the Fed was not unexpected and had little impact on most markets--but is a bullish factor for the U.S. dollar index.

The HSBC China manufacturing final PMI reading for January came in at 49.5 versus 50.5 in December, it was reported Thursday. This latest figure follows the weaker China PMI number posted last week, which is partly attributed to the emerging currencies market turmoil. This report is also an underlying bearish factor for the raw commodity sector, as China is a world leading on raw commodity consumption.

In other overnight news, European Union’s Economic Sentiment Indicator report came in at 100.9 in January from 100.4 in December. This is the highest ESI reading in 2.5 years. This report continues a trend of upbeat EU economic data that suggests the bloc is on the road to economic recovery, albeit slowly.

The Chinese Lunar New Year holiday has China on holiday for the next week. The world’s largest nation and second-largest economy being shut down for several days will likely make for subdued trading action in Asia during the Chinese holiday.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the advance gross domestic product, and pending home sales.