Tags: Gold Hits Three-Week Low as Jobs Data Trigger Selling

Gold Hits Three-Week Low as Jobs Data Trigger Selling

Thursday, 21 Oct 2010 02:22 PM

Gold fell to a three-week low Thursday, losing nearly 2 percent as lower U.S. jobless claims and a stalled euro rally prompted bullion investors to lock in recent profits.

Bullion was set for its first weekly decline in 12 weeks, after the U.S. jobs report lifted the dollar and further eroded investor demand for bullion, although several analysts said they viewed this as short-lived.

"The jobless claims drop is behind the decline, but gold's weakness is likely to be temporary. It's more as a reason to take profits than anything else," said James Steel, chief commodity analyst at HSBC.

New U.S. claims for jobless benefits fell more than expected last week, and other data showed a modest rise in a key gauge of future U.S. economic activity last month.

Despite the better jobs data, economists said it is not enough to suggest much improvement in the distressed labor market, hardening the view of more U.S. monetary policy easing next month, which benefits gold.

Gold is also on track course for a 3.4 percent fall this week, which would mark its largest weekly drop since early July, while holdings of gold in the world's largest exchange-traded fund, the SPDR Gold Trust, fell for a fourth consecutive session, indicating lower investment appetite.

Spot gold dropped 1.6 percent to $1,322.25 by 12:48 p.m. EDT (1648 GMT). U.S. gold futures for December delivery trade down $20.8 an ounce at $1,323.40.

Earlier in the session, gold rose toward $1,350 an ounce, but sentiment turned bearish after the metal failed to gain further even as the euro surged above $1.40 before retreating, traders said.

"We are in a consolidation phase. Euro was positive and gold never caught the bid and could not make a new high," said Jonathan Jossen, COMEX gold options floor trader.

The dollar reversed losses to trade higher against the euro in choppy trade as investors wrestled with uncertainty over the size and shape of expected U.S. monetary easing.

FOLLOWING DOLLARS

Gold earlier benefited from weakness in the dollar after U.S. Treasury Secretary Timothy Geithner was quoted by the Wall Street Journal as calling for "norms" on exchange rate policy.

Financial markets are alight with speculation over a possible bargain by finance ministers and central bank chiefs of the Group of 20 countries to rebalance the global economy.

Officials meet on Friday in Gyeongju, South Korea to discuss a common path on managing currency, trade and economic imbalances ahead of a G-20 summit meeting in Seoul next month.

Reflecting the lower appetite among investors for gold, SPDR said its holdings eased to 1,299.177 tons by Oct. 20 from 1,300.089 tons on Oct 19. The holdings hit a record at 1,320.436 tons on June 29.

The strength in the dollar in the past week has stripped more than 3 percent off the gold price since it hit a record high just above $1,387 last week.

Gold also shed nearly 3 percent on Tuesday in its largest one-day fall since July following China's surprise announcement of an interest rate rise.

"There have been a lot of investors going into gold already and probably at this juncture, would probably be a little hesitant, because now everyone is focusing on currency moves and the outcome of what could happen at the weekend," said Ole Hansen, a senior manager at Saxon Bank.

Silver fell 3.1 percent to $23.16 an ounce.

Platinum prices last traded down 0.7 percent at $1,667.49, while palladium edged up 0.4 percent at $586.99 an ounce.

© 2017 Thomson/Reuters. All rights reserved.

 
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Gold fell to a three-week low Thursday, losing nearly 2 percent as lower U.S. jobless claims and a stalled euro rally prompted bullion investors to lock in recent profits. Bullion was set for its first weekly decline in 12 weeks, after the U.S. jobs report lifted the...
Gold Hits Three-Week Low as Jobs Data Trigger Selling
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2010-22-21
Thursday, 21 Oct 2010 02:22 PM
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