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London Gold Market Report
THE WHOLESALE market price
of gold bullion leaped $10 per ounce to $1539 Friday lunchtime in
London – recovering the last of this week's 1.1% fall – before
sliding back as the US Dollar fell on surprisingly weak US jobs data.
The US economy added 54,000 jobs in May,
according to the non-farm payroll report from the US Bureau of Labor
Statistics, against analysts' consensus forecast of 190,000.
Silver prices also bounced but
remained 6% down on the week, at around $35.50 per ounce.
Global stock markets meantime were
heading into the weekend lower as US Treasury bonds rose and oil prices fell.
"Beware of good news...the gloom
might be overdone," said one London bullion dealer ahead of the non-farm
payroll announcement, warning that a higher-than-expected rise could catch
some traders out.
"The trade of most pain tomorrow is
a [non-farm payrolls] number that's stronger than expected," agreed John
Brady, senior vice president at MF Global Securities.
"Traders are taking chips off the
table. They're paid to manage risk, and they're very likely to do that by
taking chips off the table, especially at the beginning of the month,"
added Brady.
"The dip overnight was well bought
into," a gold bullion trader in Singapore told Reuters on
Friday, referring to Thursday's 1% gold price drop in less than an
hour.
The Euro price of gold
bullion meantime hit a two-week low on Friday, at €33,864 per
kilogram (€1053 per ounce), after news that Greece had concluded talks
in Vienna with its three non-market creditors – the EU, the
International Monetary Fund and the European Central Bank.
ECB president Jean-Claude Trichet this week mooted the idea of a pan-European body
to oversee national budgets.
"Would it be too audacious to
imagine a European Union that not only has a unified market, a common
currency and a common central bank, but also a common finance ministry?"
asked Trichet, emphasizing the need to strike
"a balance between national sovereignty on the one hand and the
interdependence of member-state actions on the other, particularly in
exceptional situations."
Greek prime minister George Papandreou
meantime has agreed in principle to an additional €6.4 billion worth of
austerity measures this year – along with another €22 billion up
to 2015 and privatization worth €50 billion.
The additional fiscal tightening is a
condition of additional bailout funds – which Greek newspaper Kathimerini reported on Friday will total €85
billion (the rumored figure on Tuesday was €60 billion).
"If we do not fight to overthrow
these policies [our children's] working future will be hell...we have a
sacred duty to our children and ourselves to cancel plans to turn workers
into modern slaves," said a statement issued by Greek leftist group
PAME, which blockaded the Greek finance ministry on Friday.
Greek unions have called for a general
strike on June 15 to protest against privatization measures.
"We are not selling and we are not
for sale," said a statement from GSEE, the main private sector union,
adding that the Greek government had given in to creditor
"blackmail".
"In the last few weeks we have
returned to a situation in which the price of gold is once again being driven
by European issues," said a note on Friday from French investment and
bullion bank Natixis.
Natixis notes that
the cost of insuring against the debt default of weaker Eurozone countries
has hit a record high.
"Throughout the month of April,
developing countries remained active buyers of gold," Natixis adds, citing significant central bank purchase by
Russia and Mexico.
Over in the US, ratings agency Moody's
warned the federal government Thursday that "if there is no progress on
increasing the statutory debt limit in coming weeks, [Moody's] expects to
place the US government's rating under review for possible downgrade,"
citing the "very small but rising risk of a short-lived
default."
"If the debt limit is raised and
default avoided, the Aaa rating will be
maintained."
The US government is expected to reach
the $14.3 trillion federal borrowing limit in early August.
Ben Traynor
You
can receive
your first gram of Gold free by opening an account with Bullion Vault : Click here.
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