Gold continues to lose ground steadily easing down to the $1220 level forecast by JPMorgan Chase last week. Gold gave up $3.80 to trade at 1234.80 after tumbling off recent highs on Wednesday. Silver continues to follow gold trading in the red giving up 106 points Thursday morning to trade at 19.733. The weakness in precious metals continued to platinum and palladium which are both in the red this morning, trading at 1454.60 and 745.40 respectively after lackluster Chinese manufacturing data compounding the fall in metals. China’s flash Markit/HSBC Purchasing Managers’ Index (PMI) fell to 49.6 in January from December’s final reading of 50.5. A drop below 50 signals a slowdown, while above that is an indication of expansion. Holdings in the SPDR Gold Trust, the biggest bullion-backed exchange-traded product, contracted yesterday after expanding 0.9 percent on Jan. 17, the biggest one-day increase since November 2011.
The dollar had risen by a similar amount yesterday in the wake of the release of stronger than expected local quarterly inflation data. “The marginal contraction of January’s headline HSBC flash China manufacturing PMI was mainly dragged by cooling domestic demand conditions,” said HSBC chief economist Qu Hongbin. “This implies softening growth momentum for manufacturing sectors, which has already weighed on employment growth. As inflation is not a concern, the policy focus should tilt towards supporting growth to avoid repeating growth deceleration seen in the first half of 2013.
Data today may show that the number of Americans continuing to apply for jobless benefits fell and home sales increased, supporting the case for less stimulus before Fed policy makers meet Jan. 28-29. In China, which probably overtook India as the biggest consumer last year, volumes for the benchmark contract on the Shanghai Gold Exchange exceeded the fourth quarter’s daily average of about 11,525 kilograms every day since Jan. 6.
Copper gave up 2 points in early trading after declining for most of the week. Copper is trading at 3.324 in the Asian session. London Metal Exchange copper prices drifted lower during Asian morning trading on Thursday January 23 after data pointed at contraction in China’s manufacturing sector. Gold dropped to a two-week low, heading for the longest losing streak in a month, as platinum slipped 0.4 percent. People are worrying about China’s credit crunch and slowdown and they will take any slice of negative news on slow growth as a reason to sell,” said Benjamin Tam, a Hong Kong-based portfolio manager at IG Investment Ltd., which oversees about $1.5 billion. “Slower growth is now the market consensus. People are watching whether the government can restore market confidence on sustainable growth.”