Gold and Silver Get Hammered Again

Gold dropped to a 10 month low this morning as investors cashed in the precious metal to cover steep losses in equities after a disappointing U.S. private-sector job report. The March ADP tally was the smallest since October, when private companies added 148,000 jobs. The main cause of the slowdown was a sharp decrease in hiring by construction firms, which did not add any jobs last month. This is a marked contrast from the previous four months. Construction job growth, supported by the upswing in the housing market, has averaged 29,000 a month according to ADP. The slowdown reflected in the ADP report was large enough to prompt at least one prominent economist to lower his expectations for Friday’s monthly jobs report from the Labor Department, which includes government and private sector hiring.

Speculators will wait eagerly for Friday’s release of th
Fears that central banks’ money-printing to buy assets will stoke inflation have been a key driver in boosting gold, which rallied to an 11-month high in October last year after the Fed announced its third round of aggressive economic stimulus 

e nonfarm government payrolls report for March that would give a fairer assessment of the U.S. jobs market. Signs of economic improvement could prompt the U.S. Federal Reserve to halt its bullion-friendly bond-buying program earlier than expected. 

Gold, a traditional safe haven, also failed to capitalize on tensions in the Korean Peninsula, where North Korea has moved what appears to be a mid-range Medusa missile to its east coast, according to South Korea’s Yonhap news agency. Gold traded as low as $1,541.14 an ounce, its lowest since May, and stood at $1,544.this morning, down $12.89. It rallied to a 1-month peak in March on worries about fiscal stability in Europe, as politicians scrambled to clinch a bailout for Cyprus. Silver tumbled to its lowest level since July last year, platinum dropped to its lowest since late August, and thinly-traded palladium was at a two-week low. Silver is trading on Thursday morning at 26.74.

Industrial and base metals eased as global manufacturing numbers have been a bit disappointing so far this month. China’s PMI although strong and expansionary were below expectations and the US ISM and factory orders were lackluster with PMI data in Europe missing their marks all across the zone except for Germany. Silver is classified as both a precious metal and an industrial metal, so it is getting hit on both sides this week. Holdings in the world’s largest silver backed exchange-traded fund iShares Silver Trust stood at 10677.89 tons by Apr 03, down by 25.70 tons from the previous business day. Industrial metals prices fell to an eight-month low yesterday as concerns about economic growth cast doubt on the global demand outlook for industrial metals and pushed speculators to open more short positions ahead of a two-day holiday in China.

Source  by Commodity Insights