Gold spot price: US Core PPI, Unemployment Claims and Flash Manufacturing PMI push gold to its lowest since 9 July

US Unemployment Claims fall to 323,000 last week

Gold spot price: US Core PPI, Unemployment Claims and Flash Manufacturing PMI push gold to its lowest since 9 July Thursday, November 21th:_ The XAU/USD yesterday lost 2.67 percent having closed at 1248.21. The price initially reached a high at 1276.28 and then started to fall. There was increased fluctuation around the release of US October Retail Sales figures (up 0.4 percent), CPI (down 0.1 percent) and Existing Home Sales (down to 5.12 million), but the real breaker was the Fed report on the FOMC’s latest meeting, which said that the central bank is very likely to trim its $85 billion per month injections into the economy in near future. Following this news, the price fell to a low of 1240.95.

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Today the pairing rebounded very slightly to an intraday high of 1250.32, but after US data was released the price dropped sharply to an intraday low of 1236.67 – the lowest point since 9 July. Also there the price action touched the lower line of a descending channel, within which price of gold has been trading since late August.

The number of applications for unemployment benefits in the US fell by 21,000 last week, having reached 323,000. This is their lowest level since September. Analysts had expected the index to fall to 333,000 from 344,000, revised up from 339,000. The reported week contains one national holiday which usually means a drop in claims. The average value of claims for the last four weeks, which is considered a more refined indicator of the labor market decreased by 6,750 to 338,500. The number of individuals already receiving unemployment benefits rose by 66,000 to 2.88 million in the week ended 9 November.

The US October Producer Price Index m/m showed a drop by 0.2 percent, matching analysts’ forecasts. The index continued to decline for a second consecutive month and by a faster pace compared with the prior 0.1 percent decrease. Meanwhile the Core PPI (excluding the volatile items of food and energy) m/m lifted by 0.2 percent, surpassing the forecast 0.1 percent rise. For the past year the Core PPI hasn’t shown a single decline.

Producer prices rose only 0.3 percent compared to October 2012, while the producer prices excluding food and energy grew by 1.4 percent year-on-year.

The Markit US Flash Manufacturing Purchasing Managers Index rose to 54.3 points in November. This is an 8-month high on the indicator, which was at 51.8 points at the end of October. Values above 50 indicate expansion in the sector and the data for November suggest a faster rate of expansion. Markit chief economist Chris Williamson has said that the PMI has recovered in November from last month’s decline, suggesting that the business has returned to its normal action following the damage caused by the partial government shutdown.

So far today there has been one black sheep amongst the positive data releases – the Philadelphia Fed Manufacturing Index. In November the index has fallen significantly to 6.5 points from 19.8, falling short of analysts’ expectations of a smaller drop to 15.8 points.

At press time the price is trading at 1243.43

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