(Kitco News) – Gold prices slid deeper into negative territory Friday as Germany’s biggest bank saw some relief in equity markets.
December gold futures settled today’s session at $1,317.10 an ounce, down 0.67% on the day and ended both the week and the third quarter with losses. This is the first quarterly loss for gold since the fourth quarter of last year.
According to reports, Deutsche Bank (NYSE: DB) is seeing a resurgence in its share price, up almost 15% on the day as it is near a settlement deal of $5.4 billion with the U.S. Department of Justice.
The bank still faces a heavy fine for its mortgage lending activities during the housing bubble crash that exacerbated the financial crisis, but the settlement deal is well below the DOJ’s initial demand of $14 billion.
Not only is gold suffering as it looks like the German bank will avoid a Lehman-style collapse but equities are seeing renewed momentum. The S&P 500 is up 1% on the day, last trading at 2,172; at the same time the Dow Jones Industrial average is also up more than 1%, last trading at 18,343.
(Kitco News) – Fed Chair Janet Yellen is pushing back on recent criticism from Republican Presidential Candidate Donald Trump that the Fed is politically motivated to keep interest rates low.
Optimistic sentiment has been validated in recent days – fresh data has shown the US economy heading for its eighth year of expansion, which has pushed the dollar index to a multi-week high. It was last at 96.09.
“Gold prices are under pressure but attention is fixed on Friday’s July unemployment data. Against this ‘wait and see’ climate is apparent ongoing division among Fed policy makers based on recent public comments and speeches,” HSBC analyst James Steel said.
Investors are now keenly awaiting blockbuster US employment data to gauge the direction of gold prices before the start of the holiday weekend – economic consensus is for 186,000 jobs to have been added in August.
In a preview of the Friday employment report, the ADP non-farm employment change at 177,000 beat the forecast of 173,000.
“If the official US labour market data that are due to be published tomorrow turn out to be as good as the ADP’s figures that were published yesterday, the gold price is likely to come under further pressure,” Commerzbank said in a note. “This is because this would presumably add further fuel to expectations of a US Federal Reserve rate hike before September is out.”
In the exchange-traded funds followed by FastMarkets, holdings dropped 11.2 tonnes to 2,105 tonnes – another sign that investors are looking elsewhere after the dollar surged and general poor backdrop for safe-haven assets.
“Dollar strength and signs of disinvestment from institutional investors continue to create short-term pressure for gold,” FastMarkets analyst James Moore said. “Further dip-buying support is expected; however, bearish signals from silver could a precursor for weakness in gold, with a breach of $1,300 likely to generate deeper downside pressure.”
In data, US Challenger job cuts year-over-year in August fell 21.8 percent, off the previous 57.1 percent. Weekly unemployment claims for August 18-25 at 263,000 were below the 265,000 forecast and, more importantly, the psychological 300,000 mark.
Revised non-farm productivity quarter-over-quarter in the second quarter was in line with estimates at -0.6 percent while revised unit labour in the same period was at 4.3 percent – it was expected at 2.0 percent.
The final manufacturing PMI, the ISM manufacturing PMI, construction spending, ISM manufacturing prices and total vehicle sales are all due for release later.
Turning to European markets, Germany’s DAX and France’s CAC-40 were up 0.3 percent and 0.9 percent respectively while the dollar gained 0.1 percent to 1.1144 against the euro.
As for other precious metals, Comex silver for September delivery was virtually unchanged at $18.630 per ounce. Trade has ranged from $18.585 to $18.720. Platinum for October settlement fell $1.0 or 0.1 percent to $1,052.50 per ounce while palladium at $672.15 was up $3.45.
(Editing by Mark Shaw)
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(Kitco News) – Gold is kicking off the week under pressure as markets continue to digest last week’s comments from Federal Reserve officials in Jackson Hole, but some analysts think investors may not be pricing the yellow metal properly.
According to Deutsche Bank analysts, there is a correlation between gold prices and level of monetary expansion by central banks, and according to this relationship, the metal should be some $400 higher.
“The balance sheets of the main four central banks [US, China, Japan and ECB] have expanded by 300% since the beginning of 2005. Over the same period as the aggregate central bank balance sheet expanded by 300%, global above-ground stocks grew by 19% in tonnage terms or c.200% in value terms,” the bank’s commodity analysts Michael Hsueh and Grant Sporre said in a report Friday.
GOP presidential nominee Donald Trump and gold seem to have a lot more in common than we think, especially when looking at polling results.
And, now that his popularity seems to be waning, could prices move lower?
Earlier in the year, the real-estate mogul was leading in the polls for Republican primaries, becoming a true contender in this presidential election. At the same time, gold had its best two quarters in years, rallying nearly 30% since January.
Kitco News looked at this seeming pattern back in May, comparing the data and found that there is somewhat of a positive correlation between the billionaire’s latest poll results and the price of gold this year.
Kitco News’ Weekly Gold Outlook recaps how the week’s events affected the gold market, and where expert analysts think the metal is headed next. Every Friday, get an in-depth look into the metals space and see how experts see the fundamentals set up gold in the week ahead.