Gold experienced many ups and downs last few days and mostly circled around the $1 400 psychological barrier. The greenback lost positions against the euro as mixed, but overall positive news came out from the single-currency bloc. German factory orders showed worse than anticipated readings on both annual and monthly basis. However, Bank of England decided not to tamper with its monetary stimulus program and leave it at 375 billion GBP. Englands central bank also decided to leave its base interest rate intact at 0.50%. Same decision was taken by the European Central Bank.
On the other side of the Atlantic, Initial Jobless Claims mismatched expectations by a little and fell to 346 000 for the week ending June 2, down from 357 000 the preceding week, but still 1 000 more than the 345 000 decrease expectation. This further pushed the dollar down, increasing prices of dollar-priced commodities.
On the Comex division of the New York Mercantile Exchange, gold traded at $1 400, 45 at 13:25 GMT. The precious metal plunged to a session low at $1 391,25 and a hit a high at $1 406.55 per troy ounce.
Mark O’Byrne, executive director of GoldCore Ltd. in Dublin, said by e-mail for Bloomberg: “Gold has been hovering like a magnet at the $1,400 level since mid-May. It will need a convincing weekly close above the $1,400 resistance level in order to embolden bulls and this should then lead to gold challenging the next level of resistance which is at $1,500.”
Gold prices have been following shifting expectations about the possible Quantitative Easing program premature scale down. The yellow metal found support yesterday as the ADP Employment Change mismatched forecasts and showed a less than expected gain in hired workers. Later on Friday, Change in Non-Farm Payrolls, Average Hourly Earnings and the Unemployment Rate will shed some light on the health of the U.S. economy, thus dampening or sharpening expectations about Fed’s monetary stimulus program.
Still, gold was pressured by news that came out saying India, the world’s biggest gold consumer, will widen curbs on imports. Goal is to narrow a record-wide current account deficit. India’s central bank, the Reserve Bank of India, will expand its import restrictions outside banks to include state-run trading companies and others, who are authorized to directly import gold.
India’s gold imports reached 162 tons last month, up from 142 in April. Restrictions should reduce that amount to 50-100 tons in June.
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