BULLION LATEST 02/10: Gold sinks to seven-week low as dollar rebounds

The spot gold price was quoted at $1,274.95-1,275.30 per oz as of 04:56 BST, down $5.25 on the previous session’s close. Trade has ranged from $1,274.20-1,278.75 so far today, of which the low was the lowest since August 16.

• The dollar index rebounded on Monday morning as the Euro came under pressure following the violence-marred Catalan referendum in Spain – latest news cited Catalan officials as saying some 90% of voters had voted for independence while hundreds were injured following clashes between the police and voters.
• The dollar is expected to remain supported on increased expectations of the USA raising interest rates in December, market observers said.
• “US yields and the dollar are clearly the primary drivers of the gold prices at the moment…Bullish traders will now be nervously eyeing the 100-day moving average just below at $1,272.45 for some relief. A break here opening a move lower to the August lows and the 200-day moving average at $1,250,” Jeffrey Halley, senior market analyst at Oanda, said.

Silver, PGMs

• In the other precious metals, the spot silver price fell $0.015 to $16.59-16.61 per oz. Platinum increased $3 to $909-914 per oz while palladium was also up $3 at $934-939 per oz.
• There is no trading on the Shanghai Futures Exchange as Chinese markets are closed from October 2-6 due to China’s week-long National Day holiday.

Currency moves and data releases

• The dollar index was up 0.29% to 93.34 as of 04:43 BST after reaching as high as 93.38 earlier in the day – this is the highest since September 28.
• In other commodities, the Brent crude oil spot price fell 0.26% to $56.59 per barrel as of 04:52 BST.
• In data released on Saturday, China’s official manufacturing purchasing managers’ index (PMI) for September came in at 52.4, above forecast of 51.5 and August’s reading of 51.7 – the September print was the highest since April 2012.
• Noting that new orders were the key driver for the manufacturing PMI, “this was the first time new orders beat output this year, suggesting a potential ‘excess demand’ to some extent. It also provides upside risk for Q3 GDP and our forecast of 6.7% for 2017,” said ANZ Research on Monday morning.
• The Caixin manufacturing PMI for September came in at 51 on Saturday, below the expected 51.5 and August’s reading of 51.6. The official PMI is more focused on large state-owned firms, while the independently surveyed Caixin PMI is closely watched for conditions among the country’s private sector. A PMI reading of above 50 reading signifies expansion, and below, contraction.
• China’s official non-manufacturing PMI for September came in at 55.4, above August’s reading of 53.4.
• China’s central bank said on Saturday that it would cut the reserve requirement ratio –which is the amount of cash that some banks must hold as reserves – for the first time since February 2016 so as to encourage lending to small business and the agricultural sector.
• In US data on Friday, the Chicago PMI exceeded expectations in September with a 65.2 reading, above estimates of 58.5. Personal spending and income in August were both in line with estimates at 0.1% and 0.2%, respectively. The revised University of Michigan consumer sentiment disappointed at 95.1, below the forecast of 95.3. Revised inflation expectations came in at 2.7%.
• Economic data due later today includes final manufacturing PMI, ISM manufacturing PMI, construction spending, ISM manufacturing prices from the USA and manufacturing PMI from the UK.