Precious metals consolidate previous session's gains
LONDON (Aug 9) Gold gave back some of the previous session's gains in early European trading on Thursday, though the metal is largely ranging narrowly.
Spot gold was last at $1,309.25/1,310.05 per ounce, down $4.35 or a 0.3 percent, having traded in a range of just more than $10 so far today. So far this week, it is down about $4, placing it on course for its second weekly loss in a row.
Yesterday, however, the metal powered from a low of $1,282.55 to close at $1,314.75 for its biggest daily gain in nearly a month.
"Gold prices rose back above $1,300 on Thursday, helped by a weaker US dollar and lower bond yields," Credit Suisse said.
Indeed, the dollar fell to a seven-week low against the euro at 1.34 yesterday, holding just short of its lowest since February at 1.3434, after US jobless claims climbed to 333,000 for the week to August 3, 5,000 more than expected, and eurozone data also painted a slightly rosier picture of the region’s economy. The greenback was last slightly firmer at 1.3375.
The US Federal Reserve has explicitly linked interest rates to labour market targets. The national non-farm unemployment rate will have to drop to 6.5 percent before the central bank moves rates up from the current exceptionally low level of 0-0.25 percent.
During the decade-long bull run, gold’s biggest allies have been historically low central bank interest rates and quantitative easing.
In data today, the Chinese CPI and PPI both came in below expectations at 2.7 percent and -2.3 percent respectively. Industrial production at 9.7 percent was better than the forecast of 0.9 percent but retail sales at 13.2 percent undershot the expected 13.5 percent.
M2 money supply outperformed at 14.5 percent, as did new loans at 700 billion yuan, while fixed asset investment at 20.1 was in line with forecast and unchanged from the previous month
In equities, the Nikkei closed up fractionally, with the Hang Seng gaining 0.6 percent. In Europe, the FTSE 100 and the Dax were either side of unchanged.
Among the other precious metals, , silver fell seven cents to $20.19/20.24 per ounce while platinum - yesterday’s star performer - returned to its eight-week high at $1,495. It was last quoted at $1,485/1,490 per ounce, down $7 on the close. Palladium was unchanged at $734/743.
"Platinum and palladium significantly outperformed [gold]. Platinum and palladium are less sensitive to interest rates than gold and more sensitive to economic data. We think this outperformance of platinum and palladium over gold is likely to continue," Credit Suisse said.
The metals were also supported by supply concerns after South African platinum miner Northam warned that deadlocked wage negotiations could lead to strikes at its mines yesterday.
