Gold prices declined in the US after weekly net long positions fall by their largest degree in six months, while recent US labour data and Chinese stimulus failed to provide support.
Gold for June delivery on the Comex division of the New York Mercantile Exchange was last down 80 cents at $1,188.1 per ounce. Trade has ranged from $1,183.1 to $1,190.9, in line with the 50-day moving average of $1,189.07.
The gold net long fund position dropped 28,817 contracts to 72,440 on 16,824 lots of long liquidation and 11,993 lots of short selling.
“While the net length is now below its 2014 average of 95,223 contracts, it is still above its 2015 low at 53,093 contracts,” FastMarkets’ Boris Mikanikrezai said of the aggressive 28-percent decline in the net length. “So while short accumulation or long liquidation could continue in the next few weeks, we believe the risks have diminished.”
Last week, the US non-farm employment rate for April was 223,000, missing the forecast of 228,000, while the March total was revised down to 85,000 from 126,000 previously.
“The US labour market data were not really strong enough to provoke it despite showing a robust job creation rate and a decline in the unemployment rate,” Commerzbank said. “Clearly gold has once again been switched to equities as US equity markets have been rising – the S&P 500 is now only just below its record high of late April.”
In US equities, the Dow Jones industrial average and S&P were both up 1.5 percent and 1.4 percent respectively. In europe, Germany’s DAC and France’s CAC-40 were both down 0.4 percent and 1.1 percent respectively. The euro was 0.5 percent weaker at 1.1152 against the dollar - Greece faces a deadline to make another repayment to the IMF on Tuesday.
The Greek debt crisis is at another crucial stage – a deal needs to be struck in June so the Mediterranean country can deliver payments due in July and August.
Elsewhere, the Chinese central bank (PBoC) lowered lending and deposit rates by 0.25 percentage points to 5.1 percent and 2.25 percent respectively to spur lending and help bolster growth in the faltering Chinese economy. Although further stimulus from the world’s largest consumer of commodities has not yet provided a lift to gold prices, continued weak data from China could lead to more aggressive capital injections.
In other data from China, the country’s CPI at 1.5 percent missed the forecast of 1.6 percent, while the country’s PPI was as expected at -4.6 percent.
In other precious metals, Comex silver for July delivery was up less than a cent at $16.465 per ounce. Trade has ranged from $16.365 to $16.525. Platinum for July delivery on the Nymex fell $9.60 to $1,133.90 per ounce while the most actively traded palladium contract was at $784.40, down $17.95.
Light sweet crude (WTI) futures edged $0.24 lower to $59.12 per barrel in the most active contract.
(Editing by Mark Shaw)
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