Gold Prices "Range Bound", Dip Below "Psychologically Important" $1300 as Consensus Forecasts Fresh Falls

[The Machine]

 

 

GOLD PRICES dipped Thursday in Asian trade, holding below what one bank's trading desk calls the "psychologically important" level of $1300 per ounce for the first time in a week.

 

New manufacturing data showed strong growth for July in both China and the Eurozone, where service-sector activity also expanded at its fastest pace since 2011 on the Markit consultancy's PMI survey.

 

After the China Gold Association said Wednesday that first-half demand in the world's No.1 consumer nation fell 19% by weight vs. H1 2013's record surge, new data today said gold bullion imports to China through Hong Kong – net of exports – hit a 17-month low in June.

 

Dropping some 30% in the first six months of last year, Yuan gold prices rose 5.4% between Jan. and end-May 2014, adding a further 4.4% last month.

 

"Acceleration in the US economic recovery story remains the key driver behind our lower gold price forecast," says a note dated Wednesday from US investment bank Goldman Sachs.

 

Repeating its call for gold to end the year at $1050 – below 2013's three-year lows – "US economic releases have continued to [improve] while tensions in Ukraine have escalated, keeping gold prices range bound near $1300."

 

New data Thursday said US claims for jobless benefits were the lowest last week since 2006.

 

"Investors going risk-on into equities pushed the gold price lower," reckons the commodities team at Germany's Commerzbank in Frankfurt. "Silver followed gold's trail."

 

"The rally in US equities continues to be a headwind for gold," agrees Australia's ANZ Bank, "despite safe haven buying providing some support to prices."

 

Warning today of a "dire situation" in Gaza, the United Nations also reported that bandit army the Islamic State has ordered mass mutilation of women and girls in the Iraq city of Mosul, under its control since early June.

 

The Financial Times meantime reports that a pro-Russian separatist leader in eastern Ukraine "came close to an admission of guilt" for killing 298 civilians on Malaysian flight MH17 last week, saying his forces did control a missile launcher of the type believed to have downed the airliner.

 

"We are mildly bullish for gold this year," Reuters quotes analyst David Jollie at Japanese trading house Mitsui, "but we feel many of the gains may already have been made."

 

That contrasts with the newswire's survey of 31 market analysts, which earlier this week showed consensus forecasts of a slight annual drop in 2014, with gold prices averaging $1255 in the last 3 months of the year against $1290 over the first half.

 

While US Fed tapering of its quantitative scheme "should [now] be fully priced in", says Jollie, the end of that process will however spur "market uncertainty" with regards to when the central bank may raise rates.