Gold price steadies after three-day drop
London (Jun 8) Gold steadied after a three-day losing streak on Monday as the dollar and stock markets fell, though prices stayed near 11-week lows after Friday’s strong US jobs report fuelled speculation that interest rates may rise in September.
The metal touched its lowest since March 19 at $1,162.35 on Friday after data showed US job growth accelerated more than expected last month. May non-farm payrolls increased 280,000, the largest gain since December.
Spot gold was flat at $1,171.31 an ounce at 12.43pm GMT, while US gold futures for August delivery were up $3.10 to $1,171.20 an ounce.
"We managed to claw back and close above $1,170 on Friday and today the market took a little bit of comfort from a slightly weaker dollar," Saxo Bank senior manager Ole Hansen said. "Fundamentals don’t add much support to the gold move." Analysts see the next major support level for gold around the March low of $1,142.
The US jobs report, indicating signs of strong momentum in the US economy, bolstered expectations the Federal Reserve will begin to raise rates in September, which would increase the opportunity cost of non-interest-paying bullion.
A retreat in stock markets, strength in which has diverted some interest from gold, helped underpin prices. Sales of German government bonds weighed on European equities.
Investor positioning in bullion continued to reflect bearish sentiment.
Further outflows were seen from the world’s top gold-backed exchange-traded fund SPDR Gold Trust. Holdings fell 0.17% to the lowest since mid-January at 708.70 tonnes on Friday.
Hedge funds and money managers cut net long positions in gold and silver in the week ended June 2, US Commodity Futures Trading Commission data showed on Friday.
In mining news, South Africa’s Association of Mineworkers and Construction Union said on Sunday it would launch a wildcat strike if its rival union and gold mining companies impose a wage deal on its members.
Interest in physical gold in the major Asian markets picked up on Monday after bullion prices declined for a third straight week, by 1.6%. "We did notice solid Chinese interest during their morning session as the on-shore premium moved to around $3.50," MKS said in a note.
"Friday’s low should provide broad short-term support for the yellow metal, while $1,180 will be met with some resistance." Spot platinum was up 0.4% at $1,095.65 an ounce. Silver was down 0.3% at $16.01 an ounce, while palladium fell 0.5% to $744.45 an ounce.
Source: Reuters
