Precious metals prices continued lower early on Monday in Europe but at a slower pace than in recent weeks, with pro-Democracy protests in Hong Kong providing a boost to safe-haven buying.
Violent clashes between protestors and the police were reported in Hong Kong over the weekend and this morning, with tear gas and water cannons being used to disperse huge crowds blocking access to the financial district.
Having traded as low as $1,215.30 at one point this morning, spot gold managed to make back some of the losses and was last a modest 60 cents above Friday’s closing level at $1,219.40/1,220.20 per ounce.
The pattern was repeated in silver, which dipped as low as $17.47 before recovering to $17.54/17.59 per ounce, down eight cents.
“The precious metals remain vulnerable but gold prices are moving sideways in choppy trading, which suggests both underlying buying and overhead selling,” FastMarkets analyst William Adams said. “The same is true for silver, while the PGMs are still looking for support, which we feel will be found soon given the fundamentals. Any turnaround in the dollar is also likely to prompt some buying interest.”
The dollar again made gains against the euro. It was last at 1.2671 against the single currency, up a tenth of a cent.
Last Friday, global risk appetite was bolstered by the revision in second-quarter US GDP growth to 4.6 percent, its strongest pace since the fourth quarter of 2011.
In a speech, Dallas Federal Reserve president and FOMC member Richard Fisher warned that the central bank must not “fall behind the curve” and urged caution that “we could suddenly get a patch of high growth, see some wage-price inflation, and that is when you start to worry”.
The data helped US stocks indices climb 0.85-1.05 percent and raised expectations that the US central bank will bring forward an increase in interest rates and lift them further and faster than previously expected.
Macroeconomic data and the European Central Bank will be key focuses by investors later this week. The ECB policy decision this Thursday comes after last week’s downbeat testimony from ECB president Mario Draghi to the EU parliament and the recent string of weaker-than-expected euro-zone economic data.
The lacklustre outlook for the eurozone as well the region’s stuttering economy has led many to speculate that the ECB could deliver more stimulus measures this week.
This morning, the Spanish flash CPI came in above forecast at -0.2 percent, while the PCE price index, person spending, personal income and pending home sales are scheduled from the US later.
Towards the end of the week, US non-farm payrolls for September will be keenly watched as well. Markets expect 216,000 jobs to have been created this month while the national unemployment level is expected to be unchanged at 6.1 percent, according to forecasts.
So the macroeconomic environment looks to be negative gold, although the metal may find modest support during the seasonally strong period for physical demand.
As well, Chinese markets will close for the Golden Week holiday from October 1.
The platinum group metals followed in gold’s footsteps. Platinum was last up $4 at $1,301/1,306 per ounce, having slipped to $1,296 earlier, while palladium was up $4 at $782/788.