Weak sales, US job growth send gold prices tumbling
One of this year’s defining stories has been the decline of commodity prices. Chief among them is gold, which has lost more than 28 percent of its value in 2013. Friday’s upbeat US jobs report sent gold prices tumbling further, a trend expected to continue as US recovery takes shape. Fresh data from the US Department of Labor showed that the US economy added 195,000 jobs in June, trumping expectations by 30,000. The news triggered a fresh selloff for gold, which lost $26 on the day, dropping to its lowest level this week.
Gold prices continue to be highly volatile in the face of a bullish US dollar, whose strength triggered further declines for the precious commodity last month. In wrapping up the June FOMC policy meetings, Fed chief Ben Bernake reaffirmed his faith in US recovery, and outlined a plan for the eventual rollback of QE stimulus. Since then, gold has been at the mercy of the US dollar. On Friday the US dollar index was up again, this time by 1.46 percent, to close the New York session at 84.4490.
Adding to bullion’s woes was news from Australia, one of the world’s largest gold refiners. Bullion sales from Australia’s Perth Mint, which refines virtually all of country’s gold, declined for a second straight month, leaving many to speculate whether the apex of the gold market is long behind us. Despite gold’s multiyear lows, refiners haven’t witnessed the same buying frenzy they experienced in April when prices fell to their lowest level since August 2010.
At the end of New York trade, gold for August delivery was down 3.13 percent at $1,212.70 an ounce. Spot gold was down more than 2.1 percent at 1,223.14 an ounce. Needless to say, gold price forecasts have been cut across the board and by as much as 10 percent for the rest of 2013. Mild recovery is expected for the precious commodity, but few forecasts project a price point above $1,050 an ounce by 2014 year-end.
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