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Gold Bouncing Around $900 on Further Bad U.S. Jobs Data

Commodities / Gold & Silver 2009 Apr 03, 2009 - 08:47 AM GMT

By: Adrian_Ash

Commodities THE PRICE OF PHYSICAL GOLD slipped in a tight range near yesterday's two-week lows early Friday, bouncing around $900 an ounce for US investors as the 3-day jump in world stock markets faded.

New data showed the US shedding jobs at a faster pace in March. A revision to Jan.'s figure pushing total job losses so far in 2009 above two million.


The "risk-friendly" Euro fell hard versus the Dollar, as did crude oil, while London's FTSE100 ticked back to 4,100 – a level first reached in Dec. 1996 – after jumping more than 4.0% on Thursday.

The Gold Price in Sterling continued to fall sharply, dropping back to £606 an ounce and losing more than 13% from Feb.'s all-time record high for UK investors.

"As gold renewed its acquaintance with the $900 level," noted London dealers Mitsui this morning, "physical buying out of India emerged. Clearly, there is an appetite in these regions, but we suspect gold will have to travel deeper into the $800s before a strong buying momentum occurs."

For now, "Gold scrap flows have stagnated, but fresh investment flows have also slowed," says Manqoba Madinane for Standard Bank. "SPDR, the largest gold-denominated ETF , has seen no inflows since Thursday last week."

The spread above US Treasury yields demanded by corporate-bond investors has meantime narrowed, Madinane adds, and Standard Bank's proprietary Risk Aversion Index points to "reduced financial market systemic risk, which would bode ill for gold."

In late-Asian trade on Friday, the Japanese Yen – another key "safe haven" buy since the global financial crisis began in Aug. 2007 – slipped to ¥100 per Dollar and ¥135 per Euro, both five-month lows.

Japanese investors now Ready to Buy Gold saw the price of physical metal bounce to ¥2,920 per gram, virtually unchanged for the week.

"I'm not convinced that this risk appetite [in world stock markets] is going to be sustained," said Patrick Bennett, forex strategist for SocGen in Hong Kong, to the Financial Times earlier.

"[But] the Yen will probably continue to be weak because the fundamentals of the economy are just so horrid."

Japanese manufacturing activity shrank for the 13th month running in March. Industrial output has now shrunk by more than a third in the last year.

The Bureau for Labor Statistics said today that the United States lost a further 663,000 jobs in March, pushing the unemployment rate up to 8.5%.

Average earnings crept 0.2% higher from February, lagging the 0.5% rise in consumer prices.

Switzerland meantime became the second European economy to report an official drop into deflation, with consumer prices falling 0.4% on average in March from a year earlier.

Data released Monday showed annual inflation declining by 0.1% last month in Spain, where – after tripling in the 10 years to mid-2007 – Spanish real estate prices per square meter have plunged by 30% inside 18 months.

That's left as many as 1.2 million new houses and apartments.

"We agreed that it would be very dangerous if we were to let the debt spiral continue unhindered," said Jean-Claude Juncker, prime minister of Luxembourg and Eurozone finance minister, after the G20 summit ended in London on Thursday.

"Sometimes you have to accept deficits to boost demand, but it certainly can't be a long-term approach."

Failing to agree co-ordinated fiscal deficits, the group of 20 world-leading economies instead promised $1.1 trillion of monetary stimulus, to be injected via the International Monetary Fund (IMF) and partly funded by existing IMF Gold Sales .

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2009

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Adrian Ash Archive

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Comments

ijaz bashir
04 Apr 09, 07:50
gold future

sir

WHAT MAY THE GOLD FUTURE .may it rise or decline in next few days

thanks

ijaz bashir


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