Strengthening dollar and an improving U.S. economy pressure prices
It was bright day for precious metals on Thursday, 04 September 2014 at Comex. Gold prices ended the U.S. day session moderately higher on Thursday. Gold prices rebounded just slightly from Tuesday's 11-week low, shaking off concerns of a strengthening dollar and an improving U.S. economy to show signs of life in an otherwise dreary stretch for the yellow metal.
December gold rallied to a session high of $1279.20 per ounce in morning action. However, it gave up the gain as the dollar index strengthened on the ECB's decision to cut all three of its financing rates and Mario Draghi's statement that the central bank would begin purchasing simple ABS in October.
The yellow metal brushed a session low of $1265.50 per ounce and settled with a 0.3% loss at $1266.10 per ounce.
December silver also pulled back into negative territory after trading as high as $19.39 per ounce in morning pit trade. It eventually settled at $19.13 per ounce, or 0.4% lower.
The yellow metal saw selling pressure develop during the session as the U.S. dollar index pushed sharply higher and hit a 13-month high. The gold-bullish elements of the interest rate cut and quantitative easing announcement from the European Central Bank on Thursday were offset by the surging greenback.
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The ECB lowered its key interest rate to very near zero, at .005%. The market place reckoned the ECB was on the verge of announcing fresh monetary stimulus. There was uncertainty on the precise timing of any such move. ECB president Mario Draghi's press conference saw the modest quantitative easing package unveiled. The Euro currency sunk to a 13-month low on the ECB news.
Next up is the U.S. jobs report on Friday, which will give the latest reading on the important non-farm payrolls growth, seen at up 220,000 in August. Recent improving U.S. economic data suggests the Federal Reserve will continue to wind down its quantitative easing of monetary policy by the end of this year, and will likely begin to raise interest rates sometime in 2015.
There was a heavy slate of U.S. economic data due for release on Thursday at Wall Street, including the weekly jobless claims report, the ADP national employment report, the Challenger job cuts report, revised productivity and costs, the international trade report, the U.S. services PMI, the ICSC chain store sales report, the DOE liquid energy stocks report, and the ISM non-manufacturing report. That data was a mixed bag but mostly upbeat.
On the geopolitical front there have been no major, markets-moving developments this week.
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