FS: Gold price slide accelerates after unemployment claims plunge
Orlando, Florida 12/09/2013 â Gold futures came under significant downward pressure Thursday as Syria tensions eased further and weekly US jobless claims fell to the lowest level since April 2006.
Gold prices for December delivery on the Comex division of the New York Mercantile Exchange was last down $27.40, or 2.4 percent, at $1,336.40 an ounce. The yellow-metal has fallen below the 100-day moving average this morning, which triggered additional follow-up selling.
âWe blame the price slide of recent days on the abating geopolitical tensions in Syria on the one hand, and on next weekâs upcoming meeting of the US Federal Reserve on the other,â Commerzbank said.
âEvidently, a growing number of market players anticipate that an initial reduction in bond purchases will already be announced by the Fed next week. The fact that US equity markets are again nearing record highs is also weighing on gold, however, as this could prompt investors to switch once again from gold to equities and generate further ETF outflows,â the broker added.
Weekly jobless claims fell 31,000 to a seasonally adjusted 292,000, which easily beat the 332,000 forecast and marks the lowest level seven years. However, this weekâs figure might not be totally reliable as two unnamed states were upgrading their computer systems and did not process all the claims they received during the week, Reuters reported.
Gold prices often slide lower following strong labour readings because the Fed has linked interest rates and its $85 billion open ended stimulus programme (QE3) to economic targets. The national non-farm unemployment rate will have to drop to 6.5 percent before the Fed moves rates up from the current exceptionally low level of 0-0.25 percent.
The US central bank is scheduled to meet on September 17-18 to review the state of the domestic economy and assess its policy stance. Price movements in gold this year have largely tracked shifting expectations as to whether the Fed would end QE3 â sooner than had been expected.
Elsewhere, fears of an imminent military strike on Syria were temporarily quelled after Russia offered a diplomatic solution that would see chemical weapons delivered into the hands of international observers, making gold less attractive as a safe-haven asset.
âPeace is detrimental to gold; what more must we need say?â Dennis Gartman, editor of the Gartman Letter, said.
âThe Russians are âquasi-negotiatingâ peace in Syria for the moment and as such gold is under extreme pressure. It is all the more so in light of the deflation extant in Germany noted above with todayâs wholesale prices for a soon as that report was made public gold went on offer,â Gartman added.
As for the other precious metals, Comex silver prices for December delivery were down 68.2 cents, or 2.94 percent, at $22.50 an ounce.
âClearly silver is being pulled downward by the overt weakness in gold prices, but silver is also seeing some pressure from expectations of US tapering next week and also because of classic technical knock on selling activity,â the CME Group said in a market commentary.
âSilver seems to remain focused on classic physical fundamentals, as fear of the Fed has dominated recently over news that Syria rejected the Russian diplomatic solution overnight,â the exchange added.
