Gold is trading at 1316.95 as Asian investors push up the commodity in early trade to gain $6.45 after Friday’s close at 1310. Gold declined to a 2-week low in early trades on Friday, after falling through a key technical level of $1,300 per ounce, as strong US economic data raised fears that the Federal Reserve may start to taper its commodities-supportive stimulus measures. Data from the U.S. Labor Department on Friday showed that the number of jobs outside the farming sector increased by 162,000 last month, the smallest gain in four months and below analysts’ expectations. A top Fed official said on Friday the U.S. economy was improving modestly but needs to gather more steam, while cautioning that the central bank ought to wait for more evidence of an upturn before tapering bond purchases
Gold traders in India stayed on the sidelines, as importers stopped shipments due to uncertainty over the new import policy even as prices fell more than 1.5% to their lowest level in a week.
Outflows from the top eight gold ETFs tracked by Reuters have totaled 19mn ounces so far this year, or about $25bn at current prices. Gold holdings of SPDR gold trust, the largest ETF backed by the precious metal, declined to 918.64 tons while silver holdings of ishares silver trust, the largest ETF backed by the metal, declined to 10,396.73 tons, as on August 2. Hedge funds and money managers trimmed their gold net longs and raised their bullish position in silver futures and options, a report by the Commodity Futures Trading Commission showed on Friday. As long as the ETF buyers and the hedge fund investors stay sidelined, the commodity prices will remain with a negative bias. Gold is expected to continue to decline under the 1300 level this week. As the day progresses, gold could extend its climb on the anticipation of strong economic data in Europe. Europe and Germany will release PMI numbers which are expected to improve could support euro and pressurize dollar. From the US, ISM non-manufacturing number is likely to improve and could support the dollar. Trades may see gold up in the early part of the European session and decline after US data releases.
Industrial metals prices reached its highest price in more than a week on Friday as the dollar fell and after data showed slightly stronger than expected factory activity in big metals consumer China. Silver gained 31 pips this morning to trade at 19.943 while copper eased after a strong close on Friday. Copper is trading at 3.160 down by 8 pips in the Asian session. Hedge funds and money managers nearly doubled their net shorts in copper futures and options in the week to July 30, while they trimmed net longs in gold, a report by the Commodity Futures Trading Commission showed on Friday. Copper reached its highest price in more than a week on Friday as the dollar fell and after data showed slightly stronger than expected factory activity in big metals consumer China. The gains were capped by caution on the U.S. growth outlook after mixed jobs figures. The jobs data led to a broad fall in the dollar against the euro and the yen. A weaker dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.