Gold edged lower on Friday morning while yesterday’s “brutal” sell-off continues to overshadow the market.
The spot gold was last at $1,181.00/1,181.80 per ounce, down $2.20 on Thursday’s close. The yellow metal fell nearly 2.5 percent in the previous session on the strongest US jobless claims figure in 15 years.
“Stops in gold were tripped through $1,198-1,200 and again between $1,185-90 in what can only be described as a ‘brutal’ sell-off,” MKS Alex Thorndike said.
US unemployment claims came in at 262,000, the lowest level since April 2000 and below consensus of 288,000. This signalled that slack in its labour market is waning.
It follows comments earlier this week from the US Fed regarding the normalisation of monetary policy, which appears to be dependent on inflation data and the health of the domestic jobs market.
“The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labour market and is reasonably confident that inflation will move back to its two percent objective over the medium term,” the Federal Open Market Committee report said.
While the current liquidation suggests that gold traders have interpreted both the statement and yesterday’s jobs figure as hawkish on the raising of interest rates, next week’s non-farm payroll report will be crucial for maintaining that theme.
“The precious metals are surprisingly weak – the gold market just does not seem to want to rise above $1,215. A few days ago a June Fed rate rise was all but off the table and few bits of better US data yesterday seems to have changed bullion traders’ mindset,” FastMarkets analyst William Adams said.
“We still feel the Fed will remain on hold for longer and expect the dollar correction to last longer too. So gold may well have some catching up to do, especially if equities correct and investors are in need of a safe haven,” he added.
Gold is one of very few commodities not benefiting from two-month lows in the dollar – the greenback hit a fresh low this morning at 1.1258 against the euro.
With China, Hong Kong, Singapore, France and Germany observing May Day holidays today, the only numbers of note due today are the US ISM manufacturing report and vehicle sales – the latter will be scrutinised for their impact on the platinum group metals.
Platinum was last up $2 at $1,140/1,145 per ounce and palladium gained $3 to $778/783. Silver was 15 cents higher at $16.23/16.28.
(Editing by Mark Shaw)
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