SINGAPORE — Gold slipped nearly 1% yesterday as investors adjusted positions after a short-covering rally, fuelled by a softer than expected United States jobs report, and as stronger equities and bearish sentiment continued to weigh on the metal.
Despite a 3% jump on Friday, gold remained below a key $1 180/oz level that could pressure the metal back to four-and-a-half-year lows reached last week on a strong dollar and fear regarding an upcoming rate hike by the US Federal Reserve.
Gold got a boost after US nonfarm payrolls increased 214 000 in October versus a projected 231 000, hurting the dollar and boosting the metal’s appeal as a hedge. But other details of the report were solid, with the unemployment rate dipping to a fresh six-year low of 5,8%.
“The rally on Friday may well be overdone as investors mull over the US data and realise the jobs data actually wasn’t all that bad,” MKS Group metals dealer Sam Laughlin said.
“We are looking towards resistance around $1 180 to $1 185, while support will be sitting around Friday’s low print of $1 130.”
Spot gold fell as much as 0,9% to $1 168.10/oz before recovering slightly to trade down about $8 at $1 170,81 by 7:24am. It fell to $1 131,85 on Friday — its lowest since April 2010 — before recovering to post its biggest one-day gain in five months.
Asian shares gained yesterday, while the dollar edged lower.
Investor positions show the sentiment towards gold remains bearish and it could plumb new lows before the end of the year.
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Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0,78% to 727,15 tonnes on Friday — its lowest in six years.
Speculators slashed their bullish bets in gold futures and options to their lowest in four weeks, the Commodity Futures Trading Commission said on Friday.
Analysts and traders surveyed by Reuters predicted that gold prices could fall to $1 000 by the end of the year for the first time since 2009.
The case against gold comes from a stronger dollar, a robust equities market and an improving US economy — a factor that could also prompt the Fed to tighten monetary policy.
The lack of key US data meant this week could lead gold higher as the focus remained on the jobs report, Phillip Futures investment analyst Howie Lee said.
“However, this technical rebound is expected to be minor and I won’t expect it to breach past $1 185, if it does rebound,” he said.
In the physical markets, premiums in top-buyer China ranged between $1 and $2 yesterday, steady from Friday. – Reuters
