I was awaiting this…gold bouncing back from its lows last week. As expected, gold crossed the $1300 mark on Friday.
Bad news turned out to be the good news last week for gold. A higher unemployment rate and worse than expected job creation is the bad news that has proved good for gold.
Throughout the week gold was lying low, but on Friday post the release of the US jobs report, gold managed to cross $1300. (future delivery)
The US jobs report were not as strong as expected. Though they were decent, but the market came off with a strong belief that the Federal reserve won’t become any more aggressive in scaling back its accommodative monetary policy.
Now let’s see what exactly the jobs report was all about.
Labor Department data showed private employers boosted hiring to 192,000 jobs in March, just a shade below analysts’ average estimate of 195,000 net new jobs. The government reported that nonfarm payrolls rose by 192,000 in March, when expectations had been for 195,000 to 200,000. Job gains for the prior two months were revised higher by a combined 37,000. However the US jobless rate remained unchanged from February at 6.7 percent as the number of unemployed held steady at 10.5 million.
Before the jobs report was out, Analysts believed that that positive jobs data means the US Federal Reserve will likely continue cutting each month the amount of monetary stimulus it injects into the economy. But that did not happen. Markets now expect the Fed to begin raising its ultra-low interest rates in the middle of next year.
The jobs data prompted some short covering along with fresh buying, as (traders) were looking for a little better report than they got. Some traders were buying to offset, or cover, positions in which they had previously sold.
Yellow metal finds its support in the simmering geo political tensions in Ukraine and the reduced curiosity about the Fed’s tapering.
Earlier in the week, Fed Chair Janet Yellen provided a relatively dismal outlook of the labour market and said she and other committee members believe “extraordinary commitment is still needed and will be for some time.”
Prices for the yellow metal also got a boost from sustained consolidation in the stock market and it saw a little extra benefit due to the fact that it was a bit oversold after a few weeks where gold was lying low.
In the Asian markets, precious metals fetched a premium in Shanghai’s trade as compared to London for the first time since March. This saw demand rising from top buyer China, on Wednesday.
Prices for 99.99 percent purity gold on the Shanghai Gold Exchange hit a premium of about $1 an ounce to spot prices in London before paring gains. Shanghai prices had traded at a discount of between $8-$10 to London gold since March. Before this week, the last time they were at premium to London was in January, when Shanghai prices fetched a premium of about $20 or more an ounce on ramped up demand for gold before the Chinese New Year holidays.
Amongst other precious metals, platinum rose to $1432 an ounce, a rise of one per cent and palladium gained 1.2 per cent an ounce on continued worries over supply constraint and positive US car sales.
As the Anglo American Platinum said that it has sent out force majeure motives on its supple, which underscored the impact of a near 10-week old workers strike on the leading platinum producer. It’s been 10 weeks since the AMCU members have been on strike at the platinum mines. there are 70.000 members of the AMCU that have been in strike. These 70,000 workers account for more than 70 per cent of the platinum production. the AMCU has been on strike since 23rd Jan, at the Impala, Anglo American Platinum ltd. and Lonmin Plc. Due to disruptions in operations the companies have lost more than 10.3 billion rand in revenue and workers 4.6 billion rand in earnings. This has resulted in pushing the platinum prices higher.
On the other hand, gold, in the coming week, is expected to range between $1277 and $1230 an ounce in the international markets and Rs.28,000- Rs. 30,000 on the domestic markets.
While silver is expected to range between $19.20 to $20.55 and Rs 42,000 to Rs. 46,000 per kg in the international and domestic markets respectively.