BLBG: Gold Poised to Halt 2-Week Fall Before U.S. Jobs Report
Gold held yesterday’s gain, heading for a weekly increase, as investors awaited a U.S. labor report for clues on the strength of the world’s largest economy.
Bullion climbed 0.8 percent yesterday, reaching the highest since May 30, after the euro strengthened against the dollar as the market rejected the European Central Bank’s unprecedented effort to weaken the single currency and bolster growth. The ECB’s move will still lead to a weaker euro and probably cut demand for gold as investors buy other assets seen as riskier, Danske Bank A/S said in a report yesterday.
Gold slid 28 percent last year on expectations that the Federal Reserve will reduce stimulus as the economy strengthens. Government data today may show the U.S. added 215,000 jobs in May. The Fed has made four cuts to its bond-buying since January as U.S. equities advanced to an all-time high. Money managers’ short holdings betting on a drop in gold jumped 72 percent in the week to May 27, U.S. Commodity Futures Trading Commission data show.
“The ECB’s dovish stance certainly made these recent shorts nervous, so it makes sense for some to seek cover,” analysts at UBS AG wrote in a report today. There was a “hesitancy to take large positions ahead of U.S. nonfarm payrolls later today.”
Bullion for immediate delivery was little changed at $1,254.65 an ounce by 9:36 a.m. in London, according to Bloomberg generic pricing. Prices rose 0.4 percent this week, after reaching $1,240.73 on June 3, the lowest since Jan. 31. Gold for August delivery rose 0.1 percent to $1,254.60 on the Comex in New York.
Trading Volume
Futures trading volume was 42 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion’s 60-day historical volatility fell this week to the lowest since April 2013.
Yesterday, the ECB became the first major central bank to charge fees on deposits and unveiled other plans to support an economy threatened by deflation. Policy makers led by President Mario Draghi cut their deposit rate to minus 0.1 percent, lowered the key interest rate to a record 0.15 percent and announced a number of measures including targeted long-term loans.
Silver for immediate delivery rose 0.5 percent to $19.1366 an ounce in London. Palladium was little changed at $839.75 an ounce. It reached $845.24 on May 28, the highest since August 2011. Platinum gained 0.5 percent to $1,451.83 an ounce.
Mineworkers have been on strike since January in South Africa, the largest platinum producer and the second-biggest for palladium. Minister of Mineral Resources Ngoako Ramatlhodi is coordinating talks between the union and producers, which continue in Pretoria for a third day today.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net
To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net John Deane, Sharon Lindores
