BULLION MORNING – Gold price dips below $1,300/oz on Chinese data, dollar

Jul 24, 2014 - 10:42 AM GMT
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The spot gold price fell below $1,300 per ounce in early European trading on Thursday after numbers out of China created some worries for precious metals investors.

The yellow metal dipped to its lowest price since July 16 at $1,294.80 and was last still near this level at $1,296.60/1,297.40  – down $7.60 on the close and on course for its third consecutive down day, which would be the longest run of retreats since early June.

“Weighing on prices are the positive economic figures from China, the resulting positive Asian equity markets and the firmer US dollar,” Commerzbank analysts said.

The dollar pushed its eight month high against the euro to $1.343, but it has since weakened slightly to $1.348.

In Asian equities, the Hang Seng was up nearly three quarters of a percent and European indices are also generally higher.

The July HSBC Chinese flash manufacturing PMI came in at 52 against an expected reading of 51.2 and after June’s 50.7.

Data yesterday also showed that China’s gold consumption had fallen more than 19 percent year-on-year to 569.45 tonnes.

Investors bought fewer bars and coins, offsetting higher demand for gold jewellery. Sales of gold bars and coins fell 62.1 percent and 44.3 percent respectively, while jewellery sales rose 11 percent to 426.17 tonnes. Industrial consumption rose 11.3 percent.

“Following last year’s record-high gold demand, it had been assumed that demand would be less dynamic this year – nonetheless, that it should be so negative did come as something of a surprise,” Commerzbank added.

In other data, July PMI numbers out so far in Europe had France’s flash services number at a forecast beating 50.4, but its manufacturing number falling below forecasts at 47.6. German and eurozone numbers also mostly came in above expectations.

Spain’s unemployment rate continued its downward trend and fell below 25 percent for the first time since October 2012 to the lowest level since April 2012 with a reading of 24.5 percent.

Later, US new weekly unemployment claims are expected at 310,000, with this country’s flash manufacturing PMI forecast at 57.5.

The rest of the precious metals generally took their lead from gold, with the silver price down eight cents at $20.80/20.85 per ounce and platinum down $10 at $1,468/1,478 per ounce. Palladium proved the exception. It was last unchanged at $868/874 per ounce.

(Additional reporting by Lynette Tan, editing by Kathleen Retourne)