BU: US GOLD OPEN – COMEX REBOUNDS ON ECB RATE CUT, STIMULUS ANNOUNCEMENT
The precious metals complex bounced off the session lows in the US on Thursday after the European Central Bank announced a surprise rate cut and a new quantitative easing programme.
But a strong rally could prove difficult given the robust dollar and tomorrow’s looming US non-farm jobs report.
Gold for December delivery on the Comex division of the New York Mercantile Exchange was last up $1.40 at $1,271.70 per ounce. Trade has ranged from $1,268.90 to $1,276.20.
“Gold’s focus right now is on tomorrow’s non-farm payrolls – the recovery from the $1,260 lows is likely to be limited until further data clues emerge,” said UBS analyst Edel Tully, who predicted that the US added 230,000 jobs in August, which is slightly stronger than the 220,000 consensus.
“Overall, the UBS house view is that the Fed will raise rates in mid-2015 and do so at a faster pace than what is currently anticipated by financial markets – this creates an unfriendly environment for gold and drives our softer price expectations into 2015,” Tully added.
Still, in today’s news, the ECB surprised many by cutting its benchmark interest rates to 0.05 percent from the previous record low of 0.15 percent. Also, in a news conference ECB president Mario Draghi said that the bank has decided to purchase asset-backed securities.
“We see this as an attempt by the ECB to show markets that it remains determined to do, as Draghi put it, ‘whatever it takes’,” FastMarkets’ Tom Moore said. “The precious metals have rallied strongly off this change, which stimulates safe-haven buying out of the eurozone.”
In wider markets, the euro hit another year below 1.30 against the dollar and last traded at 1.3030, down 1.2 cents for the session.
In equities, Germany’s DAX and France’s CAC-40 were up 0.28 percent and 1.03 percent respectively. In Asia, the Nikkei and Hang Seng closed down 0.33 percent and 0.08 percent.
Here in the US, payroll processor ADP reported that employment increased by 204,000 from July to August on a seasonally adjusted basis, which was slightly below the 218,000 forecast but still represents a solid reading in historical terms.
“Steady as she goes in the job market,” Mark Zandi, chief economist of Moody’s Analytics, said. “Businesses continue to hire at a solid pace. Job gains are broad based across industries and company sizes. At the current pace of job growth the economy will return to full employment by the end of 2016.”
Elsewhere, German factory orders were a better-than-expected 4.6 percent, while the EU retail PMI was roughly in line with forecasts at 45.8.
As for the other precious metals, Comex silver for December delivery was last up 8.6 cents at $19.275 per ounce. Trade has ranged from $19.190 to $19.310.
Platinum futures for October delivery on the Nymex were last up 70 cents at $1,413.20 per ounce, while the most actively traded palladium contract was at $888.10, up $12.15.
