Gold prices extend losses for a second session time
Bullion metal prices ended the U.S. day session slightly lower on Thursday, 20 November 2014. A rallying U.S. stock market that continues to funnel money away from other assets such as precious metals remains a bearish underlying factor. Gold prices extended losses for a second session continuing to feel pressure from news that a proposal which could require the Swiss central bank to ramp up its holdings in bullion is losing support.
U.S. economic data released Thursday included the weekly jobless claims report, the consumer price index, the U.S. flash manufacturing PMI, existing home sales, leading economic indicators, and the Philadelphia Fed business survey. This data was considered upbeat and was another negative for the safe-haven gold market on Thursday.
Gold for December delivery fell $3 to settle at $1,190.90 an ounce, reducing an earlier loss that saw it down as much as $16.
December silver was off 16 cents to $16.14 an ounce. March Comex silver last traded down $0.15 at $16.20 an ounce.
A day earlier, gold took a hard hit early, but managed to recover some of the losses. The Federal Reserve minutes released Wednesday also indicated that policy makers discussed how to present the market with coming rate hikes, expected some time next year. Demand for gold weakens when interest rates rise because gold does not pay interest.
In overnight news, the HSBC China manufacturing purchasing managers index (PMI) came in at 50.0 in November, which is down from 50.4 in October. A PMI reading above 50.0 suggests growth in the sector. That's just another underlying bearish factor for the beaten-down raw commodity sector. China is the world's largest importer of raw commodities.
Meantime, the Markit data firm on Thursday reported the European Union's composite PMI fell to 51.4 in November from 52.1 in October, which is a 16-month low. The survey also showed manufacturers in the EU are not optimistic about future growth. This news helped to pressure European stock markets. It's also another reason for the European Central Bank to embark on more monetary policy stimulus measures.
The Japanese yen fell to a seven-year low against the U.S. dollar Thursday, as the Bank of Japan's effort to devalue the yen is working.
The market place is looking ahead to next week's OPEC meeting. Some believe the beleaguered oil cartel could reduce its overall daily oil production quota, or at least call for strict adherence to existing quotas, most of which are ignored by OPEC nations.
Traders are also already discussing next week's Swiss referendum which would require the Swiss National Bank to hold 20% of its assets in gold. A Swiss poll on Wednesday showed the majority of voters were not in favor of the measure. This news was credited in part with weakness in the gold market Wednesday.
U.S. economic data were mostly neutral with inflation over the past 12 months unchanged at 1.7% in October while initial jobless claims dropped by 2,000 to a seasonally adjusted 291,000 in the week ended 15 November 2014, as per the Labor Department.
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