FS: Comex slides lower in concert with euro on Draghi chatter
Orlando, Florida 07/02/2013 – Gold futures fell Thursday after European Central Bank President Mario Draghi revealed that the bank will watch effect of euro appreciation on inflation risks.
Gold for April delivery on the Comex division of the New York Mercantile Exchange was last down $12.90 at $1,665.90 an ounce, with the lion’s share of the losses occurring shortly after Draghi began his press conference.
The ECB decided to leave its main interest rate at 0.75 percent and didn’t announce any major monetary policy actions, which was widely anticipated by the markets. But Draghi’s comments did make some waves in the precious metals and currency markets.
“Risks to the outlook for price developments continue to be seen as broadly balanced over the medium term, with upside risks relating to higher administered prices and indirect taxes, as well as higher oil prices, and downside risks stemming from weaker economic activity and, more recently, the appreciation of the euro exchange rate,” Draghi said in a prepared statement.
Immediately after, the euro dropped to a session low of 1.3427 against the dollar, well below the 1.37 level reached last Friday.
“Given that statement, gold and the euro just had to fall together. [Draghi] basically said that the ECB is tracking the relationship between euro gains and inflation,” said a US-based gold trader, who noted that gold is often bought as a hedge against rising prices.
Meanwhile, in the equity markets, the Dow Jones industrial average and S&P 500 opened near unchanged, while Germany’s DAX and France’s CAC-40 were up 0.97 percent and 0.22 percent, respectively.
As for the more industrial commodities, light sweet crude (WTI) oil futures for March delivery on the Nymex were up 36 cents at $96.967 per barrel and the most-actively traded Comex copper contract was at $3.7390 per pound, down 0.2 cents.
In data, US unemployment claims fell 5,000 to 366,000 last week; however, the previous week’s number was was revised up to 371,000 from an earlier estimate of 368,000.
Meanwhile, physical gold demand remains firm from Asia and price dips towards $1,660 are still being bought into, Standard Bank said.
“Our preferred trading range is between $1,660 and $1,680. Support is at $1,662 and $1,659. Resistance is at $1,681 and $1,685,” the broker added.
Comex silver for March delivery was last down 40.7 cents at $31.475 an ounce. Trade has ranged from $31.295 to $31.935.
Platinum futures for April delivery on the Nymex were down $2.40 at $1,734.10 an ounce and the March palladium contract was at $763.50 an ounce, up $1.30.
“Platinum and palladium both hit 17-month highs yesterday, reaching $1,740 and $770 respectively. According to figures provided by the Swiss customs authorities, Russian palladium exports to Switzerland were down 72 percent year on year in 2012 to 154,600 ounces, the lowest level since 1990,” Commerzbank AG said in a note.
“Consequently, the supply deficit on the global palladium market – at 915,000 ounces in 2012, this was the biggest shortfall for twelve years – could be even greater this year,” said the broker, noting that total Russian sales of reserves on the global market equal less than 100,000 ounces.
