Gold tipped lower in the US on Thursday due to the absence of Chinese buyers and fast-growing fears that a particularly strong El Nino phenomenon could hurt the Indian monsoon season.
Gold for December delivery on the Comex division of the New York Mercantile Exchange was last down $6.60 at $1,127.00 per ounce. Trade has ranged from $1,125.30 to $1,133.80.
“The combination of the Chinese holiday and the US heading into the Labor Day long weekend is anaesthetising the gold market, though there is always the risk that stops get triggered as liquidity diminishes,” ICBC Standard Bank noted.
Meanwhile, this year’s Indian monsoon season may prove weaker than previously anticipated due to a historically disruptive El Nino.
“This would have a negative impact on the income of the rural population, which lives mainly off agriculture, and would thus also have negative consequences for gold demand in India, for 70-80 percent of Indian gold demand stems from the rural population,” Commerzbank noted.
In wider markets, the dollar was last 0.06 percent stronger at 1.1233 against the euro, while Germany’s DAX and France’s CAC-40 were up 1.35 percent and 1.32 percent respectively.
In China, exchanges are closed until next Monday to mark the 70th anniversary of the Allied victory over Japan in World War II.
On the data side, August services PMI figures from Europe were mixed, although the eurozone reading of 54.4 was in line with forecasts. EU retail sales in July rose 0.4 percent, below the expected 0.6 percent.
The European Central Bank left its benchmark interest rate at 0.05 percent, a move that was widely expected considering the region’s low inflation and slow economic growth. ECB president Mario Draghi is holding a press conference at which he might discuss the looming US Federal Reserve rate increase or the slowdown in China.
In the US, weekly unemployment claims increased by 12,000 to 282,000 in the week ending August 29, which missed 273,000 forecast.
Outplacement firm Challenger, Gray & Christmas reported that layoffs fell 61 percent last month to 41,186 after rising to a four-year high in July.
As for the other precious metals, Comex silver for December delivery was down 4.2 cents at $14.625 per ounce. Trade has ranged from $14.590 to $14.775.
“The gold/silver ratio has begun in recent days to move in silver’s favour and this we have always come to understand is an important coincident indicator of the market’s direction with silver leading to the upside in bull markets (the gold/silver ratio falls) and leading to the downside in bear markets (the gold/silver ratio rises),” Dennis Gartman, editor of the Gartman Letter, said.
“The fact that silver has taken the lead over gold these past several days is important and attention must be paid,” Gartman added.
Meanwhile, platinum futures for October delivery on the Nymex were down $4.60 at $1,009.00 per ounce, while the most actively traded palladium contract was at $585.50, up $2.15.
(Editing by Mark Shaw)
The post Gold liquidity dries up amid China holiday, Indian monsoon concerns appeared first on The Bullion Desk.
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