Gold Quote: Gold falls 2% to 3-week low

Gold fell two per cent to three-week lows on Thursday, as increasing efforts to contain the European debt crisis fuelled another volatile session, further diminishing bullion’s appeal as a safe haven.

Equities rallied after major central banks said they would co-operate to offer three-month US dollar loans to commercial banks to prevent money markets from freezing up. A bearish double-top chart pattern in gold accelerated technical selling as prices slid below $US1,800 an ounce.
Gold has lost seven per cent since hitting a record $US1,920.30 last Tuesday.
“Any attempt to ease the fear or moving forward with the euro zone debt crisis is going to be viewed as positive by the markets, and nonetheless takes away the need for the safe haven assets such as bonds and gold,” said David Meger, director of metals trading at futures broker Vision Financial Markets.
Spot gold was down 1.8 per cent at $US1,788.09 an ounce by 3.57pm (0557 Friday AEST), having dipped as low as $US1,772.04. The precious metal is set for its second straight weekly loss, which would be its first two-week drop since early July.
US gold futures for December settled down $US45.10 at $US1,781.40 an ounce. Trading volume was about 10 per cent above this week’s average turnover, preliminary Reuters data showed.
Silver fell 2.2 per cent at $US39.77 an ounce.
Most analysts said gold’s long-term bull run remains intact, but some investors questioned the metal’s ability to rise above $US2,000 after its most volatile trade in two years, with bullion rising or falling more than two per cent 12 times in the past 30 days.
“It seems like sentiment has swung back and forth significantly on a daily basis in the past several weeks. At the moment, gold is the readily traded asset being watched very closely by speculators and investors alike, creating volatility to the market of late,” Meger said.
On charts, gold should find support at $US1,702, a recent low reached in late August, representing the “neckline” of a bearish double-top pattern after bullion failed to extend gains above $US1,900 an ounce twice in the past four weeks, said Adam Sarhan, CEO of New York-based Sarhan Capital.
“If we are not able to get above the all-time high, by definition the double top remains in place. In the short term, it’s definitely going to be technical pressure,” Sarhan said.
Equities and the euro rose after coordinated actions by central banks eased any funding crunch created by Europe’s sovereign debt crisis. European bank shares rallied.
Gold dropped as German government bond futures staged their largest one-day fall in six months on signs of more willingness from policymakers to solve Greece’s debt crisis, prompting some to sell positions in safe-haven bonds.
US data showed an above-forecast rise in weekly US jobless claims, August inflation cooling and a surprisingly large contraction in a reading of regional manufacturing.
UBS analyst Edel Tully said in a note that the US Federal Reserve policy meeting next week could boost the gold market.
HSBC and metals consultancy GFMS said on Thursday they see gold rising above $US2,000 an ounce, citing high government debt levels and instability in the currency markets.
GFMS, a unit of Thomson Reuters, said it expected gold to break through $US2,000 an ounce by year-end, as recovering investment added to already strong bar, jewellery and official sector buying.
Spot platinum was down 1.4 per cent at $US1,783.58 an ounce, and spot palladium was up 0.9 per cent at $US721.88 an ounce.


COMMODITIES- Markets up, rebound from rout on US jobs data

Thursday January 06, 2011 09:26:19 AM GMT
* Prices jump as US private jobs data beats forecast
* CRB back on upward climb towards 27-month high
* Rebound shows dollar’s eroding influence on commods (Recasts; updates prices, market activity)
By Barani Krishnan
NEW YORK, Jan 5 (Reuters) – Strong U.S. jobs data ignited a broad commodities rebound on Wednesday, a day after prices fell their most in seven weeks.
A report showing three times more hiring than forecast for U.S. private sector jobs boosted prices of oil, metals and grains at midday after all fell in early trade as the dollar strengthened and Tuesday’s profit-taking retreat carried over.
Analysts said optimism that the U.S. economy was recovering more quickly than thought boosted the demand outlook for commodities, which finished 2010 as the top asset class.
“What’s happening now is the global economic recovery story has become just as important as the dollar story, if not more,” said Adam Sarhan at Sarhan Capital in New York. “That’s the shift we’re starting to see now.”
The Reuters-Jefferies CRB index, a global commodities benchmark, was up 0.7 percent by 1:30 p.m. EST (1830 GMT), moving toward the 27-month high hit early this week.
Gains in soybeans, sugar, crude oil and copper led the index higher a day after the CRB fell 2 percent, its biggest daily decline since mid-November.
The rebound came despite continued strength in the dollar, whose influence on commodities has eroded because investors are focused on fundamentals and the outlook for growth in 2011.
ADP Employer Services reported growth of nearly 300,000 private sector jobs in December, triple the forecast for 100,000 new jobs. Other data showed The U.S. services sector grew last month at its quickest pace since mid-2006.
Investors will watch government data due on Friday for confirmation of the improving jobs picture.
The data put the dollar on pace for its biggest one-day gain against the yen in more than three months and its biggest increase against the euro in more than two weeks.
The dollar has traditionally had an inverse relationship with commodities as its strength raises the cost of raw materials. Gold is often the one commodity that bucks the trend as investors see it more as a hedge against inflation.
But even gold prices bounced up off their lows as the precious metal traded more in sync with the broader market than as a stand-alone safe haven.
While economic data dominated the day, fundamental factors also supported various markets. Floods in Australis hurt the wheat crop, boosting grains. The U.S. government reported that crude inventories fell more than forecast in the final week of 2010, which lifted oil prices. Dry weather in Argentina cast doubt on the soybean and corn harvests, boosting prices.
On the Chicago Board of Trade, soybeans surged about 2 percent to a session high of $13.87 a bushel, pulling corn and wheat higher too.
On the New York Mercantile Exchange, crude oil rose over 1 percent to return above the key $90 per barrel mark.
Also on NYMEX, copper climbed 1 percent to a session peak above $4.41 per lb. (Additional reporting by Nick Trevethan in Singapore; Editing by David Gregorio)