Bullion metal prices ended substantially higher on Thursday, 02 May 2013. Bullions ended the U.S. day session with solid gains on Thursday. Gold decided to act more like a raw commodity than a safe-haven asset on Thursday, as the raw commodity sector showed good price gains. An interest rate cut by the European Central Bank on Thursday morning added to bullish sentiment in the raw commodity sector.
Gold for June delivery ended higher by $21.4 (1.5%) at $1,467.6 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.
July silver ended higher by $0.49 cents (2.1%) at $23.83 an ounce on Thursday.
The European Central Bank on Thursday cut its key interest rate by 0.25%, to 0.5%, which was expected by many market watchers. Recent weak EU economic data made the case for such action. Just Thursday it was reported that Euro zone manufacturing activity in April declined. The Markit manufacturing gauge came in at 46.7 in April compared to 46.8 in March. A number below 50 indicates a month-to-month decline in manufacturing activity. ECB president Mario Draghi at this monthly press conference following the ECB meeting said his central bank could even charge a negative interest rate if economic conditions in the EU warrant. That was another bullish signal for safe-haven gold.
The Federal Reserve's policy-making committee's FOMC statement on Wednesday contained no major surprises. However, what was read as slightly bullish for the precious metals and for the raw commodity sector is that the Fed made no mention of a timeframe for winding down its quantitative easing program and said it could adjust its bond-buying up or down based on U.S. economic conditions. The market place now turns its attention to Friday morning's U.S. jobs report.
In Asian news overnight, the HSBC China manufacturing PMI came in at 50.4 in April versus 51.6 in March. This reading follows the official China government PMI reported Wednesday, which was also down from the previous month. The weakening China PMI data this week has been a bearish weight on the raw commodity sector, including the precious metals, as it suggests less demand from the world's largest consumer of raw commodities.
In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, stayed steady on Thursday.
In today's economic data, the initial claims level dropped from an upwardly revised 342,000 (from 339,000) for the week ending April 20 to 324,000 for the week ending 27 April 2012. That was the lowest initial claims reading since January 2008. The consensus expected the initial claims level to increase to 346,000.
The U.S. trade deficit narrowed in March, falling from an upwardly revised $43.6 billion (from $43.0 billion) to $38.8 billion. The consensus pegged the deficit at $43.0 billion. Export levels fell $1.7 billion in March to $184.3 billion as large declines in foods (-$1.0 billion) and petroleum-based products (-$1.1 billion) outweighed gains in aircraft parts ($0.8 billion) and nonmonetary gold ($0.5 billion). Meanwhile, imports declined by $6.5 billion to $223.1 billion, with most of the drop occurring due to weaker demand for consumer goods (-$3.4 billion).
Also of note, nonfarm business labor productivity increased 0.7% in the preliminary first quarter reading after falling 1.7% (revised from -1.9%) during the fourth quarter. The consensus expected productivity to increase 1.2%. Output levels increased 2.5%, up from a 0.7% fourth quarter gain.
At the MCX, gold prices for June delivery closed higher by Rs 374 (1.4%) at Rs 26,914 per ten grams. Prices rose to a high of Rs 27,000 per 10 grams and fell to a low of Rs 26,543 per 10 grams during the day's trading.
At the MCX, silver prices for July delivery closed higher by Rs 581 (1.3%) at Rs 44,633/Kg. Prices opened at Rs 44,144/kg and rose to a high of Rs 45,248/Kg during the day's trading.
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