Gold price around three-month lows
Gold prices hovered above three-month lows on Friday, a day after after posting their biggest one-day loss since 2008, with investors wary of taking risks amid mounting sovereign debt fears in Europe.
Liquidity has been thinning ahead of the Chinese New Year holidays in mid-February, exposing the market to more volatility, traders said.
A slide in stocks, commodities falling broadly and the weaker euro triggered large technical selling in the gold market on Thursday, pushing down prices to their lowest since November 3.
Amid escalating sovereign debt problems in Europe, key U.S. non-farm payrolls data due later in the day could prompt further liquidation of positions after an unexpected rise in U.S. jobless claims put investors on the defensive.
“As sentiment has turned technically bearish after yesterday’s sell-off, the non-farm payrolls numbers could be used to push prices down to the $1,050 level,” said Wakako Harada, a senior trader at Mitsubishi Corp in Tokyo.
Spot gold traded in a range around the $1,050 level for about a month last October before breaking upward to test new highs in December.
“There is a general sense of risk aversion that may not be necessarily tied to the shift in asset allocations, but may be linked more to investors simply wanting to keep cash,” Harada said.
Spot gold was at $1,063.35 per ounce as of 0155 GMT, little changed from New York’s notional close of $1,062.60. Spot gold hit a low of $1,059.10 an ounce on Thursday, the weakest since November 3.
At current levels, spot gold was set for a weekly drop of nearly 2 percent.
Spot bullion’s 4.2 percent decline on Thursday was its biggest one-day percentage loss since December 1, 2008, when it tumbled 5.6 percent, Reuters data showed.
U.S. gold futures for April delivery were also steady at $1,064.00 per ounce, compared with $1,063.00 on the COMEX division of NYMEX.
Other precious metals remained pressured on Friday after posting huge losses the previous day.
Spot silver was up slightly at $15.25 per ounce, while spot platinum eased to $1,483.00. Spot palladium fell nearly 3 percent to $395.25.
On Thursday, silver slid nearly 7 percent to its lowest since September, platinum dropped more than 4 percent and palladium fell 6 percent.
As bullion prices hit three-month lows, so did holdings at the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust.
Its holdings fell 0.5 percent to 1,104.550 tonnes as of February 4, down 5.789 tonnes from the previous business day, and the lowest since late October. The holdings fell for a second straight day.
The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust, also said its silver holdings eased 0.04 percent or 4.21 tonnes from the previous business day to 9,351.77 tonnes as of February 4.
Investor flight from risk pushed the benchmark Nikkei average down more than 3 percent to a seven-week low on Friday.
Asian stocks were also lower across the region.
The dollar index surged past 80 for the first time since mid-July 2009 on Friday as a sell-off in the euro gathered pace on growing investor anxiety about sovereign debt in Europe.
The euro plunged to a more than eight-month low against the dollar on Thursday when European Central Bank President Jean-Claude Trichet predicted many members in the bloc will have large, sharply rising fiscal imbalances.
Strength in the U.S. dollar makes dollar-priced commodities more expensive for holders of other currencies.
Source: Reuters