On the last day of the trading week, gold futures tumble further. The decline came before the anxiously expected US unemployment report for March.
In early Asian trading hours, gold contracts for June delivery fell by 0.1% losing $2 to trade at $1,550.40 per ounce.
Yesterday on the Comex division of the New York Mercantile Exchange, the yellow metal future prices lost $1.10 to stand at $1,552.40 per ounce. Though, futures managed to cut some loses in the last few minutes of trading. The recovery found support from the weaker US dollar as it lost more ground against the euro currency. Despite the loss cut, gold still registered a third straight decline session. Over the last three trading sessions prices have lost a total of 3.1% worth $48.50 per ounce.
A weaker dollar tends to support dollar-denominated commodities such as gold. That’s because it makes them less expensive to holders of other currencies.
On Thursday, the yellow metal marked its third consecutive decline and was on track for a loss of nearly 3% for the entire week.
Today the pressure on gold came ahead of the US Labor Department’s unemployment report for March. The results are scheduled for release later in the day. Economic analysts expect 190,000 new jobs in March non-farm payrolls. There is a cut down from an earlier projection of 195,000 new jobs.
Investors and traders are now nervous as the non-farm payroll figures could give clues when the Federal Reserve will contract its asset purchases. Yesterday, the weekly unemployment claims climbed to a four-month high. In respect, worries started growing as the already sluggish levels of hiring in the US may be slowing even more.
In Asian trading on Friday, the dollar index which measures the U.S. currency against a basket of six major rivals, was up 0.2% at 82.862. The greenback also extended its gains against the Japanese yen. The yen fell at the start of Bank of Japan’s aggressive monetary easing plan that was announced yesterday. The new governor of Bank of Japan – Haruhiko Kuroda launched a two-year easing campaign. The governor claimed that he would do everything it takes to reach the 2% consumer-inflation target.
In respect a new monetary policy order in Japan will appear. That will support economic recovery optimism as the beginning of deflation’s end. Hence, the yen will become even weaker while the equity-market will thrive.
An upside factor that could provide relative support for gold is the potential for an additional banking crisis in Europe. Slovenia is expected to be the next debt victim. The country could require additional ECB intervention and easier monetary policy. However, such perspectives are not expected to cause major effect on gold prices, which we see gradually decreasing by at least 10% in the near term.
