US MIDDAY: gold slips

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Gold fell on Wednesday as losses in equities and other commodities, following disappointing US private-sector jobs data and weak physical demand, extended the precious metal's decline to a second day. The metal, which for most of the year has tracked the performance of riskier assets, came under pressure after the ADP employment report showed US companies hired the fewest people in seven months in April, adding to concerns that the economy has lost some momentum.

Market watchers said the ADP data, however, was not enough to alter a view that a strong run of US economic indicators have smashed hopes of further quantitative easing, or government bond purchases, by the Federal Reserve. The gold market is looking to Friday's April nonfarm payrolls data for the latest clue about whether the US central bank will continue to keep interest rates near zero for the next several years and to use stimulus to boost economic growth.

"Unless we get a truly dismal number on Friday, the payrolls data will not radically push the market higher going forward based on QE," said Frank McGhee, head precious metals trader of Integrated Brokerage Services LLC. Spot gold was down 0.5 percent at $1,652.80 an ounce by 2:11 PM (1811 GMT).

US gold futures for June delivery settled down $8.40 an ounce at $1,654. Trading volume was 20 percent below its 30-day average, preliminary Reuters data showed. Gold prices have been held in check in the last month by a dearth of physical demand, with buyers in key jewellery consumer India deterred by high prices and a weak rupee. Other factors include exchange-traded funds reporting outflows and coin sales easing.

Some appetite returned for gold coins in May, with the US Mint reporting sales of 10,000 ounces on the first day of the month, half the total sold in the whole of April. April was its worst month for gold coin sales since June 2008. Holdings of gold-backed, exchange-traded funds monitored by Reuters, which issue securities backed by physical gold and proved a popular investment during the financial crisis, fell by 194,000 ounces in April and edged below 70 million ounces on Tuesday for the first time since February 2.

Courtesy: BR

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