Gold price softer as safe-haven status wanes

Otmane El Rhazi from The Bullion Desk.

The gold price drifted lower during Thursday’s early morning sessions, albeit remaining in recent ranges, following Fed comments yesterday, alongside a reduction in safe-haven status.

Spot gold was last at $1,184.20/1,185 per ounce, down $8 on the previous day and drifting further away from the psychologically important $1,200 level.

The move lower came following comments from the US Fed chair Janet Yellen last night, when she said that bond yields could see a sharp jump.

As well, the yellow metal’s status as a safe-haven waned as threats surrounding Greece leaving the Eurozone were calmed.

According to Bloomberg News, Greek Finance Minister Yanis Varoufakis said that he and Italian Finance Minister Carlo Padoan are both working towards achieving a solution which is essential not just for Greece, but for the solidity and robustness of the Eurozone.

The dollar was weak against the euro , last at $1.1335, following disappointing data out of the US yesterday.

“The inability of gold to rally in the face of a weaker USD may indicate underlying weakness,” said HSBC analyst James Steel.

 “The dollar itself lost substantial ground against the euro, buffeted by rising European yields and ADP data out of the US showing that private employers added only 169,000 jobs last month, the fewest since January 2014 and 40,000 short of expectations,” INTL FCStone analyst Edward Meir said.

But still, participants are focused on tomorrow’s blockbuster non-farm payroll data – any surprises here would have implications for gold.

“The slew of reports made the guessing game as to when the Fed will move on rates all the more convoluted ahead of Friday’s nonfarm payrolls report. The reading should give us a better handle of just how weak the labor complement of the economy really is,” Meir said.

“The metal will likely remain range bound between $1180-1210 in the lead up to Friday, with most of the moves seen in the last week or so seeming to be driven by positioning rather than fundamentals. As always the NFP’s could set the tone for the next few weeks ahead,” added MKS Capital.

In today’s data, German factory orders disappointed at 0.9 percent, but French industrial production and French trade balance were positive at -0.3 percent and -4.6B respectively.

Later,  the EU will have retail PMI, while from the US there will be challenger job cuts, unemployment claims and consumer credit.

Silver at $16.37/16.42 was down from the previous $16.53. Platinum was $7 lower at $1,136/1,141 and palladium at $787/792 was down $3.

 

 

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