Gold slides from 9-week high as stocks steady, dollar firms
LONDON, January 8, 2016
Gold prices fell as much as one per cent on Friday, retreating from the previous day's nine-week high as stock markets steadied after this week's rout and the dollar strengthened.
European stocks edged up 0.1 per cent after Asian shares gained, with battered Chinese equities rising strongly after China suspended its market circuit breaker and guided the yuan higher for the first time in nine days.
Jitters over the Chinese economy had spooked global stock markets and sent investors sprinting to safe-haven assets this week, sending gold sharply higher.
Spot gold peaked earlier on Friday at $1,112 but quickly pared gains. It was down 0.9 per cent at $1,099.05 an ounce at 1305 GMT, while US gold futures for February delivery were down $8.90 an ounce at $1,098.90.
"Concerns over China, and possibly the Middle East, have prompted some safe-haven demand. That has stirred the gold price," Capital Economics analyst Simona Gambarini said. "But as we know, safe-haven demand can be quite volatile."
"We are generally positive on the gold price for the year, but not necessarily on safe-haven demand. That's a wild card."
Investment appetite for gold showed signs of picking up this week. Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose 4.2 tonnes on Thursday, data from the fund showed.
Attention was turning to US non-farm payrolls data due at 1330 GMT, which traders will watch for clues on the outlook for US interest rate policy.
The prospect of rising rates in the United States was a key factor pushing gold down more than 10 per cent last year.
A strong report could be seen as prompting the Federal Reserve to raise rates at a faster pace. That could dent demand for non-interest-paying gold, while boosting the dollar.
Silver was down 1.7 per cent at $14.05 an ounce, while platinum was flat at $873.45 an ounce. Palladium was up 1.1 per cent at $497.55 an ounce.
Palladium fell below $500 for the first time since September 2010 on Thursday, reaching a low of $481.67. It is set to end the week down 11 per cent.
"Technically the chart looks horrible -- the metal has collapsed through the $500 figure and the only support visible on a 10-year weekly chart is at $447 -- the 61.8 per cent Fibonacci retracement of the entire 2009 to 2014 rally," ICBC Standard Bank said in a note.
"By that point the metal will be oversold and due a bounce, but not because there is any 'deficit' of metal." - Reuters
