Precious metals prices edged slightly lower ahead of the weekend as a slew of economic data releases painted a mixed macro backdrop. Gold and Silver came off by 0.5% and 1% to $1753.29/oz and $34.11/oz respectively. Palladium finished flat on the day, while Platinum shaved off 0.3%. First, the US October employment report showed a headline payrolls number of only 80k, lower than the consensus number of 95k.
However, our economists believed that along with positive net revisions of the previous months and unemployment rate falling to 9.0% from 9.1%, the employment reports indicated that the labour market has been quite resilient against a variety of global economic uncertainties. That said, the market is of course more concerned with Europe. The final euro area PMI composite for October was revised down to 46.5 from 47.2. Our in-house research highlighted the downward revision was significant and mainly reflected weaknesses in the services sector.
As the economic situation has been clearly worsening in Europe, the G20 summit appeared to have made some progress in alleviating sovereign debt fears in Europe as the IMF has promised to enhance its surveillance of the economic and financial conditions of countries such as Greece and Italy. In the official sector, according to data released by the IMF, sovereign Gold buying continued in September. For instance, Thailand bought 15.6 tonnes of gold and is now the third largest official buyer of the metal this year.
Russia added 6.75 tonnes for the same month, while Bolivia raised its reserves of the yellow metal up by 7 tonnes (Reuters). Net ETP flows for gold remain positive in October and this month so far. The most recent weekly CFTC data showed additions to net speculative lengths for precious metals across the board. Gold’s net non-commercial positions saw a large addition of 10200 lots, mostly due to the reduction of 9200 lots in short positions and a small addition of 1000 lots in long positions. Silver’s speculative length grew by 1200 lots for the week in reference, with a fall in short positions as well as an increase in long positions. Platinum’s net non-commercial length inched up by 900 lots, while that of Palladium also put on a modest 100 lots.
Courtesy: Barclays Capital
