Gold Trades Little Changed Above Lowest in Six Weeks in London

03:47 PM @ Monday - 04 August, 2014
Gold traded little changed above a six-week low in London as investors assessed the health of the U.S. economy after last week’s jobs report.

U.S. data showed Aug. 1 that while employers added more than 200,000 jobs for a sixth month, the jobless rate rose. Gold prices climbed after the report, as the dollar weakened from a four-month high against 10 major currencies and equities slipped amid concern that Argentina’s default and a crisis at Portugal’s Espirito Santo SA would constrict credit markets.

The Federal Reserve said last week that slack in the labor market persisted even as the economy was picking up, repeating that it will keep interest rates low for a considerable time after ending asset purchases. Bullion, which slid 28 percent last year on the outlook for reduced U.S. stimulus, reached a three-month high on July 10, partly as tension over Ukraine and in the Middle East spurred demand for a haven.

“The U.S. employment situation is perhaps not as rosy as hoped for and that the Fed may well be right with their statement the other day stating that they still had concerns about the job market,” David Govett, head of precious metals at Marex Spectron Group in London, said in a note today. “However, one slightly negative figure does not a bull market make for gold and I doubt we will see this as the start of another rally for the yellow metal.”

Gold for immediate delivery rose 0.1 percent to $1,294.89 an ounce by 9:06 a.m. in London, according to Bloomberg generic pricing. It reached $1,279.30 on Aug. 1, the lowest since June 19. Gold for December delivery increased 0.1 percent to $1,295.80 on the Comex in New York.
Trading Volume

Futures trading volume was 54 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

Bullion’s 14-day relative-strength index fell to 38.9 last week, the lowest since June 9. A drop to 30 is seen as a sign by some traders who study charts that prices are poised to rise. It was at 45 today.

“Gold had a reprieve as the dollar pulled back after the payrolls data,” said Zhang Lin, an analyst at Yongan Futures Co. in Hangzhou, China. “The U.S. has entered a monetary-tightening cycle and gold will continue to face downward pressure in the mid to longer term.”

Silver for immediate delivery rose 0.5 percent to $20.4325 an ounce in London, after falling to $20.255, the lowest since June 19. Platinum gained 0.4 percent to $1,469.44 an ounce. It reached a five-week low of $1,454.38 on Aug. 1. Palladium climbed 0.5 percent to $869 an ounce.
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