Lukewarm data takes a toll, as does a stronger dollar
By Claudia Assis and Barbara Kollmeyer, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures retreated Thursday, as the U.S. dollar advanced and preliminary data showed manufacturing activity in China and Europe remained weak.
Gold for December delivery GCZ2 -0.40% dropped $4.20, or 0.2%, to $1,767.40 an ounce on the Comex division of the New York Mercantile Exchange.
Widespread weakness “is evident across the board” for metals futures, wrote Edward Meir, an analyst with INTL FCStone in New York, in a note.
“We suspect that what is going on is that we are finally seeing a long-overdue correction set in, as most markets were heavily overbought much of this week,” he said.
Gold shot up in recent sessions, amassing month-to-date gains of nearly 5% as action by global central banks to ease monetary policy spurred buying interest.
Monetary easing is positive for gold, as the metal is viewed as a store of value and, as a tangible asset, it benefits amid fears of currency debasement.
Investors were evaluating the possibility of more stimulus for the Chinese economy as preliminary September data released by HSBC on Thursday showed manufacturing activity in the country contracted for the 11th straight month in September. Read more on China's HSBC PMI.
“Pressure is building on China to make the next move to provide stimulus to boost its slowing economy. A further contraction in its vast manufacturing sector could finally trigger action from Beijing,” Lynette Tan, precious-metals analyst at Phillip Futures in Singapore, wrote in a note.
U.S. data on unemployment benefits and manufacturing activity was lukewarm.
Markit said its flash manufacturing purchasing managers’ index remained at 51.5 in September.
Markit also reported euro-zone flash manufacturing PMI rose to 46.0 from 45.1 in August. Readings below 50 indicate a contraction.
Applications for U.S. jobless benefits fell by 3,000 to 382,000 in the week ended Sept. 15. Analysts polled by MarketWatch expected a drop to 375,000.
Gold was also pressured by a higher dollar. The dollar index DXY +0.64% , which tracks the greenback’s performance against six other major currencies, rose to 79.581 from 79.071 in late North American trading on Wednesday.
A stronger greenback is negative for dollar-denominated metals as it makes them more expensive to holders of other currencies. The broader metals complex tracked gold lower, with copper leading the declines.
Copper for December delivery HGZ2 -1.56% dropped 6 cents, or 1.5%, to $3.76 a pound.
October platinum futures PLV2 -1.59% tumbled $23.60, or 1.4%, to $1,616.80 an ounce. Palladium for December delivery PAZ2 -1.68% dropped $10.95, or 1.6%, to $662.10 an ounce.
Silver for December delivery SIZ2 -0.34% shed 8 cents, or 0.2%, to $34.51 an ounce.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Barbara Kollmeyer is an editor for MarketWatch in Madrid. Virginia Harrison in Sydney contributed to this report.
