US GOLD PRICE – Volatility finally returns to bullion market

Jun 25, 2014 - 12:41 PM GMT

The gold rally ran out of steam overnight, the metal’s inability to move higher spooking some investors who decided it was time to trim their exposure and take profits.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange were last down $7.40 at $1,313.90 an ounce. The yellow metal has had something of a bumpy ride, peaking at $1,326.00 on Tuesday before dropping back to $1,305.40 in Asian trade.

“Gold is weak this morning, correcting a goodly portion of what it had gained late last week, but refusing to give back all of those gains,” Dennis Gartman, editor of the Gartman Letter, said.

“The ‘Bugs’ will try to see government manipulation or intervention as the reason for the overnight weakness; we, on the other hand, shall simply cast of gold’s weakness to the unwinding of various gold/platinum and/or gold/palladium and even gold/copper crosses that had been put on along the way,” he added.

Nevertheless, the erratic price action will do little to attract fresh buying and serves only to make shorts increasingly nervous as to whether they should cover or not, UBS analyst Edel Tully noted.

In data out so far today, the German GfK consumer climate index has come in at 8.9 against a forecast 8.6. Later releases include Italian retail sales, the UK’s CBI realised sales and, in the afternoon, US durable goods orders, final GDP, flash services PMI and crude oil inventories.

In wider markets, the euro was near unchanged at 1.3603 against the dollar, while Germany’s DAX and France’s CAC-40 were down 0.60 percent and 0.64 percent respectively.

Light sweet crude (WTI) oil futures for August delivery on the Nymex was last up 52 cents at $106.55 per barrel, while the July Comex copper contract was near unchanged at $3.1505 per pound.

As for the other precious metals, Comex silver for July delivery was last down 18.3 cents at $20.860 per ounce. Trade has ranged from $20.705 to $20.935.

Platinum futures for July delivery on the Nymex were down $15.90 at $1,456.00 per ounce, while the most actively traded palladium contract was at $824.00, down $6.40.

Meanwhile, in major platinum and palladium producer South Africa, five months of industrial action ended yesterday when producers announced a wage deal with unions had been agreed, allowing some workers to return to their posts as early as today.

Producers have warned, however, that the return to full output will take weeks to complete, with production pipelines expected to take between four and eight weeks to restock, depending on the metal.

“The newswires report ‘massive turnout’ of returning workers this morning. As anticipated, both platinum and palladium have brushed off the conclusion of the strike and are now trading independently of South African headlines,” UBS’ Tully said.

(Editing by Mark Shaw)