Gold price near 2010 low, all eyes on US jobs data

Nov 5, 2014 - 4:39 PM GMT
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The gold price remains just above fresh four-year lows hit this morning, with attention turning to the blockbuster US non-farms jobs data on Friday.

Spot gold was last at $1,145.20/1,146 per ounce, down $23.20 on Tuesday’s close but above the earlier four-year low of $1,137.80, as the dollar continued to climb – it was last at 1.2476 against the euro, up two-thirds of a cent.

In today’s data, the ADP non-farm employment change rose to 230,000 jobs last month from the revised 225,000 in September. This is a four-month high and the third straight month of higher increases, indicating maintained momentum in the sector.

“The precious metals are under heavy pressure, with silver leading the descent,” Standard Bank said in a note. “Gold is also trying to find its feet at around $1,140 per ounce, though a slightly better-than-expected ADP figure has had little impact overall. With the ADP number out of the way, focus is switching to Friday’s NFP figure. The metal is nevertheless at the lowest it’s been since mid-2010 and remains under pressure.”

Focus now turns to Friday’s non-farm payrolls – a positive number could send gold into freefall.

In other data today, the Spanish services PMI at 55.9 in October was up slightly from 55.8 in September and the Italian services PMI rose to 50.8 from 48.8.

The EU final services PMI was marginally lower at 52.3 in October from 52.4 in September but retail sales at -1.3 percent were down from 0.9 percent in the previous month and missed the forecast -0.6 percent.

Metal traders are also closely watching energy markets. US crude oil and Brent crude futures both fell more than 2.5 percent on Tuesday after top oil exporter Saudi Arabia cut prices to the US.

Light sweet crude (WTI) oil futures on the Nymex are now below $79 per barrel after starting the year at $98, while Brent is around $84 per barrel, down from $110 at the beginning of 2014.

The three-month gold forward offered rate (GOFO) slipped into backwardation today, following the one- and two-month rates below zero – this is often seen as barometer for physical demand, which suggests that investors are looking to take delivery of physical metal in the near-term.

In the other metals, silver is looking increasingly susceptible to testing $15 should downside pressure from the dollar and tumbling gold price continue. The metal was last at $15.45/15.50 per ounce, down 55 cents, after hitting a fresh February 2010 low at $15.15 earlier.

“Silver has fallen nearly 10 percent in just four days and, while it seems oversold, there is little sign that it is about to mount a determined comeback, with the metal still closing in on $15,” Standard Bank added.

Platinum at $1,202/1,207 per ounce was down $19 while palladium, which had been performing well on the increased US confidence, was $27 lower at $755/760.

 

(Editing by Mark Shaw)