Gold fell significantly during the Asian session on Thursday with a solid tone in risk appetite. The dollar continued to advance against the yen despite cautious remarks on the potential for higher interest rates from Philadelphia Fed President Harker.
A fresh round of yen weakness and USD/JPY move above 105.00 pushed prices sharply lower to below $1,330 per ounce in early European trading.
The Bank of England left interest rates on hold at 0.50% following the latest policy meeting, contrary to the expectations of many that they would be cut to 0.25%. The Monetary Policy Committee indicated that it expected policy easing at the August meeting, but there was some downward pressure on gilt prices, which dragged global yields higher and also tended to undermine gold prices.
US economic data releases were stronger than expected with jobless claims unchanged at 254,000 in the latest week and compared with expectations of a rise to 263,000. Producer prices rose 0.5% in the month and the core increase was significantly stronger than expected with a 0.4% increase.
The data overall will tend to nudge the Federal Reserve towards a tighter policy. Following the data there was a further decline in bond prices as 10-year benchmark bond yields increased to the highest level for July.
There was a mixed dollar performance as it edged lower against European currencies, but made further headway against the yen on further speculation over fiscal and monetary easing in Japan.
Overall risk appetite remained strong with equities rising as the S&P 500 index tested fresh record highs and gold prices dipped further to test support close to $1,320.
There was a reversal in price action towards the European close as bond prices recovered from their worst levels and the yen also recovered round with gold moving back towards the $1,330 area as silver held above the $20.00 level.
Chinese GDP data will be watched closely on Friday with the US also releasing important reports on retail sales and consumer prices, which are liable to trigger further volatility.
Gold prices recover from July lows
15 July 2016
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Gold prices dipped lower on Thursday and tested the lows for July on stronger risk appetite and rising bond yields before recovering slightly in New York trading, AzVision.az reports citing the Economic Calendar.
