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May 22 2015, 07.10am GMT


Gold futures dropped on Thursday after downbeat economic data out of China, Europe and the U.S,

This decline comes also as metal traders assess the release of the Federal Reserve’s April meeting minutes on Wednesday which provided a clear indication that the central bank is not likely to increase rates as early as June this year.

The New York Mercantile Exchange’s Comex division saw June delivery for gold drop $4.90 or 0.41% to trade at $1,203.80 an ounce. On Thursday, gold futures traded in a tight range, peaking at a $1,212.30 session high in overnight trade before dropping to a $1,201.20 daily-low.

The recent fluctuations in gold trade have been minimal, with the exception of the sell-off on Tuesday when gold futures plummeted 1.7 percent. Added to this, since May 15, the precious yellow metal has closed less than 0.45% in an up or down position. During this period, there hasn’t been a 2 day winning streak or a multiple day slump for the commodity. Meanwhile, gold closed up on 5 out of 6 sessions previously to reach a 3 month high at $1,232.00 an ounce on the 18th May.

New job claims in the U.S. climbed slightly last week by 10,000 to 274,000 after the numbers remained in the range of 260,000 over the previous 3 weeks. Still, however, the 4 week average dropped by 5,500 to 266,250, moving even lower for the 4th straight week. This can be compared to mid-April when the 4-week average peaked over the 285,000 mark. Continuous claims, in the meantime dropped by 12,000 to 2.21 million for the week that ended on the 9th May, which also marked a 15-year low.

Investors are awaiting the release of the CPI (Consumer Price Index) on Friday for further hints on the next move by the Fed. The Federal Open Market Commission (FOMC) said that consumer price inflation is continuing to drop below its long-term targeted 2% goal.

Gold, which is detached from interest rates and dividends, battles to compete with assets that are higher yielding in periods of increasing rates.

In other news, the prime minister of Greece, Alexis Tsipras arrived from the most recent round of discussions with the nations creditors in the euro zone. A Greek bailout extension, due for expiry next month is expectedly up for discussion at the Riga summit, The Guardian reported.

Also, the May Chinese HSBC-Market manufacturing PMI index rose slightly to 49.1, which was below the 49.3 expectation. Any number under 50 indicates contraction in the sector. This is also indicative of increasing deflationary pressures, fuelling speculation of possible added stimulus measures by the People’s Bank of China.

One kilogram of 99.99% gold dropped 0.62 yuan to 241.79 on the Shanghai Gold Exchange. Interestingly, China is the largest consumer and 2nd largest producer of gold in the world.

MT4 Chart: Gold

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