Gold up 0.4 pct but rally seems to be fading, shrugs off fresh eurozone troubles
London (03/07/2013) Gold eked out some gains in early European trading on Wednesday morning but the recent recovery rally looks to be petering out despite renewed signs of crisis in the EU.
Spot gold was last up $4.95 on the close at $1,248/1,248.80 per ounce but down considerably on the previous session's high of $1,267.75.
"[Yesterday] the metals were looking very robust into early London but that quickly changed as the dollar firmed across the board to gradually move lower into the New York session," Alex Thorndike of MKS Capital said.
The euro slipped to a session low of 1.2920 against the dollar before recovering somewhat to 1.2954, still down a fifth of a cent, with sentiment in the eurozone worsening.
Greece must thrash out a deal with its foreign lenders, who are displeased with the apparent lack of progress in reforms to the country's public sector, in the next few days or risk missing out of the next tranche of bailout monies
And yields on Portugal's 10-year bonds jumped more than 100 basis points to 7.97 percent following the shock resignation of foreign minister Paulo Portas a day after finance minister Vitor Gaspar stepped down - moves that may signal the end of the country's fragile coalition government.
Barring a large-scale implosion in the eurozone, however, the focus in the precious metals market will be firmly on US jobs numbers, with the release of the weekly unemployment figure brought forward to allow for Independence Day on Thursday.
Today’s data includes Challenger job cuts and ADP non-farm employment change, plus the trade balance, initial jobless claims and ISM non-manufacturing PMI and crude oil inventories.
In eurozone data already released today, the Spanish services PMI for June came in as expected at 47.8, while that of Italy disappointed at 45.8 against an expected 47.1. The final services PMI for the region as a whole was 48.3, below the forecast and the previous month's reading of 48.6.
But the region's retail sales for May surprised to the upside at 1.0 percent - they were expected to grow 0.4 percent. The German and French Markit Services PMIs for June both outperformed at 50.5 and 47.2 respectively.
Earlier, China’s non-manufacturing PMI came in at 53.9 against the previous month’s 54.3.
Physical gold has proved relatively subdued in recent days, with investors sidelined by recent volatility, ANZ said in a research note.
But central banks were again net gold buyers in May, the World Gold Council said. Russia added 6.2 tonnes to its holdings, Kazakhstan added four tonnes and Azerbaijan added two tonnes.
Turkey's holdings climbed 18.2 tonnes but this was partially the result of its central bank's policy for accepting gold in lieu of reserve requirements for commercial banks, the WGC said.
In paper gold, holdings in the exchange-traded funds followed by FastMarkets fell 4.29 tonnes to 2,048.99 tonnes on Tuesday, building on Monday's decline of 2.76 tonnes and outflows of more than 100 tonnes across the whole of June.
