Gold Poised to Halt 2-Week Fall Before U.S. Jobs Report
New York (June 6) Gold traded little changed and headed for a weekly gain in New York as investors awaited a U.S. labor report for clues on the strength of the world’s largest economy.
Bullion climbed 0.7 percent yesterday, reaching the highest since May 30, after the euro strengthened against the dollar as the market rejected the European Central Bank’s unprecedented effort to weaken the single currency and bolster growth. The ECB’s move will still lead to a weaker euro and probably cut demand for gold as investors buy other assets seen as riskier, Danske Bank A/S said in a report yesterday.
Gold slid 28 percent last year on expectations that the Federal Reserve will reduce stimulus as the economy strengthens. Government data today may show the U.S. added 215,000 jobs in May. The Fed has made four cuts to its bond-buying since January as U.S. equities advanced to an all-time high. Money managers’ short holdings betting on a drop in gold jumped 72 percent in the week to May 27, U.S. Commodity Futures Trading Commission data show.
“The ECB’s dovish stance certainly made these recent shorts nervous, so it makes sense for some to seek cover,” analysts at UBS AG wrote in a report today. There was a “hesitancy to take large positions ahead of U.S. nonfarm payrolls later today.”
Gold for August delivery was little changed at $1,252.70 an ounce by 7:41 a.m. on the Comex in New York. Prices rose 0.5 percent this week, after reaching $1,240.20 on June 3, the lowest since Jan 31. Bullion for immediate delivery was also little changed at $1,252.78 in London, according to Bloomberg generic pricing.
Trading Volume
Futures trading volume was 41 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion’s 60-day historical volatility fell this week to the lowest since April 2013.
Yesterday, the ECB became the first major central bank to charge fees on deposits and unveiled other plans to support an economy threatened by deflation. Policy makers led by President Mario Draghi cut their deposit rate to minus 0.1 percent, lowered the key interest rate to a record 0.15 percent and announced a number of measures including targeted long-term loans.
Silver for July delivery lost 0.2 percent to $19.04 an ounce in New York. Palladium for September delivery added 0.3 percent to $841.60 an ounce. It reached $845 on May 28, the highest since August 2011. Platinum for July delivery gained 0.4 percent to $1,451 an ounce.
Mineworkers have been on strike since January in South Africa, the largest platinum producer and the second-biggest for palladium. Minister of Mineral Resources Ngoako Ramatlhodi is coordinating talks between the union and producers, which continue in Pretoria for a third day today.
