Los Angeles, CA – April Gold Futures traded solidly lower Thursday, hitting a 9-week low. Gold traded $16.20 lower to $1634.50 an ounce on a firmer U.S. dollar index and crude oil trading down almost $4 to ~$105.00 a barrel. Silver also traded lower down $.40 to $31.82 an ounce.
The precious metals sector took a decline this week on weak manufacturing news coming out of China. A series of weak data coming from the commodity-consuming titan caused the commodity market bulls to fade thus far during this week of trading. HSBC Holdings and Markit Economics reported that a preliminary measure of Chinese manufacturing slipped to 48.1 in March, a number which reflected the lowest reported in four months. News was also reported that Chinese factory activity shrank in March for a fifth successive month. “There’s a bit of China backlash at the moment, and we should expect more turbulence as people assess whether China is heading for a hard or a soft landing” said Filip Petersson, commodity strategist at SEB in Stockholm. “There’s a far greater chance of a soft landing but there will be more doubts from time to time, and sentiment has turned quite rapidly bearish today in Europe.” Because of this uncertainty, the global stock and commodity markets, which include gold and silver, have faced stout sell-off pressure.
Similarly, the Eurozone also reported weak economic data which has investors worried that the EU could slip into a deep recession. The U.S. dollar index is trading higher based on improved optimism on U.S. unemployment figures, as unemployment benefits decreased by 5000 to 348,000 in the week ended March 17th. A firmer U.S. Dollar index has caused the Euro currency to sink for the 3rd straight day, a condition that caused the price of Gold and Silver to decline.
This week, investors look to the U.S. economic data due for release Thursday, which includes the weekly jobless claims report, the housing price index and leading economic indicators. Despite the recent pullback, Gold is still up more than 5% since the beginning of 2012 and is in its 11th year of consecutive gains. Technical resistance for gold is currently set at $1670.00 an ounce, with psychological support currently at $1600.00 an ounce.
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