Au Up On Weak U.S. Job DataGold Jumps 1% in 30 Mins on Weak US Jobs Data
London Gold Market Report
from Ben Traynor
BullionVault
Friday 08 July, 08:45 EDT
Gold Jumps 1% in 30 Mins on Weak US Jobs Data
U.S. DOLLARgold bullionprices responded to Friday’s disappointing US non-farm jobs data bysoaring 1% in less than 30 minutes to $1542 per ounce – the highestlevel for two weeks.
Stocks and commodities dipped while USTreasury bonds gained after news that the US economy only added 18,000non-agricultural jobs in June, less than 20% of what many analystspredicted.
The number of long-term unemployed –those out of work for 27 weeks or more – fell to 42% of totalunemployed, down from 46% in May.
Going into the weekend, gold priceswere heading for a 3.5% gain on the week early Friday afternoon inLondon, having performed strongly in Thursday’s New York trade.
“[However], gold appeared as somewhat ofa laggard” behind other precious metals on Thursday, says Marc Ground,commodities strategist at Standard Bank.
“[This hints] that investors are beginning to feel that gold is a bit overbought at these levels,”
gold bullion “remains strong on other currencies, notably in Euro terms,” says Swiss precious metals refiner MKS.
The gold price in Euros hit €34,698 per kilogram (€1079 per ounce) Friday lunchtime London time – up 5.4% for the week.
Silver prices meantime rose to $36.60 – an 8% gain on the week.
On Thursday meantime, European CentralBank president Jean-Claude Trichet repeated his desire to see “no creditevent, no selective default, no default” in the Eurozone.
Speaking at a press conference after theECB voted to raise its interest rate to 1.5%, Trichet also said the ECBwill continue to monitor “upside risks to price stability.
“It is essential recent price developments do not give rise to broad based inflation pressures over the medium term.”
The ECB also announced Thursday that ithas suspended its application of the “minimum credit rating threshold”for Portuguese government debt. This means it will still acceptPortuguese bonds as collateral, even though ratings agency Moody’sdowngraded them to junk status – below investment grade – on Tuesday.
“The ECB would rather have [Eurozone]taxpayers carry the risk [of default],” reckons Jan Randolph, head ofsovereign risk at consultants IHS Global Insight, adding that it fearsbecoming a permanent “bad bank” where junk assets are held to prevent acrisis in the financial system.
In Basel meantime the latest annualreport from the Bank for International Settlements – known as thecentral banks’ bank – shows a 635 tonne reduction in gold bullion deposits from central banks, the FT reports.
The withdrawal of gold bullion– the largest in ten years – suggests that central banks are unhappywith the interest they get for lending their gold, reports the FT. TheGold Lease rate on Thursday was 0.1%.
“There may have been a switch back tolending to the private sector,” said Philip Klapwijk, executive chairmanof leading precious metals consultancy GFMS.
Over in India – the world’s largest gold bullionmarket – state-owned bullion dealer MMTC expects its gold imports forthe current fiscal year to reach 350 tonnes, up 40% from the previousyear, according to a report from MSN India.
Silver bullion imports, meanwhile, are expected to grow 36% to 1200 tonnes.
Ben Traynor
BullionVault
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Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter,the UK’s longest-running investment letter. A Cambridge economicsgraduate, he is a professional writer and editor with a specialistinterest in monetary economics.
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