Gold price lacks direction after mixed signs on US economy

May 21, 2015 - 5:31 PM GMT
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The gold price recovered from another one-week low on Thursday afternoon after mixed US data and dovish Fed minutes played on sentiment.

Spot gold was last at $1,204.00/1,204.80 per ounce, down $5.30 on Wednesday’s close, having hit its lowest in a week  again at $1,201.60 following the US weekly jobless claims figure.  

The metal has come close to retesting the key psychological $1,200 level twice in the last two sessions – further downside pressure from the dollar may trigger another retest on Friday. Silver was up seven cents at $17.14/17.18.

US weekly jobless claims came in at 274,000, which was broadly in line with expectations of 271,000. For the past four weeks, however, the average of 266,250 is the best figure in 15 years.

Investors will have interpreted this as a strengthening labour market, which was directly cited as one of the factors that may sway the Fed into raising interest rates.

But sentiment soon soured after the release of forecast-missing existing home sales at 5.04 million and the Philly Fed manufacturing index at 6.7 against consensus at 8.1.

This pushed the dollar back from session highs – it was last at 1.1126 against the euro.

“Recent US data has painted a conflicting picture on the state of US economic momentum, causing indecision in gold following its correction on renewed dollar strength – driven by a jump in housing data,” FastMarkets analyst Tom Moore said.

In data this morning, the French flash manufacturing PMI was better than expected but its flash services PMI, Germany’s flash manufacturing and services PMIs and the eurozone current account all undershot.

The eurozone flash manufacturing PMI was better than expected at 52.3 but its flash services PMI missed at 53.3.

Sentiment has been mixed since last night’s release of the Federal Open Market Committee (FOMC) minutes from the April 28-29 meeting. These effectively ruled out a rise in interest rates in June – in line with market expectations – but gave no clue on whether a rise from near-zero levels could happen in September, December or even in 2016.

In the PGMs, platinum was last down $2.50 at $1,149/1,154 per ounce, while palladium was up $3 at $774/779.

Platinum market sentiment looks set to remain downbeat in LPPM Week this week where participants are increasingly frustrated by platinum’s failure to react positively to its fundamentals.

 

(Editing by Mark Shaw)