Author: Paul Ploumis05 Jun 2015 Last updated at 14:05:44 GMT
EDGWARE (Scrap Monster): Gold prices dropped over $10 per ounce Friday lunchtime in London as the Dollar jumped following much stronger than expected US jobs data for May.
US equities joined European shares in falling hard for a second day, and US government bond prices also fell, pushing 10-year Treasury yields to the highest level since early October at 2.41%.
Gold priced in Euros rose in contrast, adding almost 1% to reclaim mid-week levels as the single currency retreated on the FX market, dropping some 3 cents from yesterday's 2-week highs above $1.1375.
Like the gold price for US and UK investors however, bullion in Euro terms held on track for its second-lowest weekly finish of 2015 so far.
"All those factors that parked a weak jobs number in March were short-term," CNBC quotes a recruitment service's economist – "more like a late-winter sniffle than a lingering illness."
But the economy has "lost some momentum" said Federal Reserve voting member Daniel Tarullo at a New York banking conference late Thursday, adding that policy-makers "want to see a little bit healthier wage increase."
The Fed should wait for "more tangible signs of wage or price inflation" before raising rates, agreed Christine Lagarde of the International Monetary Fund on Thursday, making a rare statement on US monetary policy.
Hourly US earnings last month rose 2.3% from May 2014, the BLS said today – the fastest nominal growth rate since 2009.
Falling through what technical analysts had called 'key' support at $1170, the Dollar gold price today extended this week's drop to 2.3% after the Bureau of Labor Statistics put its estimate of May's US payrolls growth at 280,000 – almost one quarter greater than Wall Street's consensus forecast.
Yesterday's move below $1180 in gold "came – as usual – from macroeconomic data out of the US," says one trading desk in London, with "traders hence betting that US NFP [would] be upbeat.
"Net long positioning in gold futures might see further liquidation."
Friday's break below "key support at $1170" said a note from Swiss bank UBS "would push the metal into the bearish camp and open [a path to] $1143" – the gold price low of mid-March.
The Japanese Yen meantime fell to new 13-year lows at ¥125 per Dollar, extending its drop since last autumn to more than one-fifth.
"Finally! The Yen breaks 30-year support," wrote French bank and bullion market-maker Societe Generale's global strategist Albert Edwards this week.
Looking at export economies wanting to devalue their money to stay competitive, "The most important thing as the Yen sets off another round in the global currency war," Edwards went on, "is that China is now in outright deflation and cannot tolerate Renminbi appreciation."
That risks "forcing commensurate devaluations across the whole Asian region and sending a tidal wave of deflation westwards."
Silver today also fell hard after the US jobs data as gold prices went lower, briefing dipping below $16.00 per ounce for the first time in 5 weeks to show a 3.9% loss in Dollar terms from last Friday's finish.