By Wallace Witkowski and Barbara Kollmeyer, MarketWatch. SAN FRANCISCO (MarketWatch) — Gold ceded gains from last week on Monday, dipping below the key $1,300-an-ounce level, as speculators moved out of long positions.
On Friday, gold took advantage of weakness in equity markets to finish the week above the $1,300 mark as U.S. jobs growth in March came in a bit below expectations. The weekly win follows two straight weeks of losses amid a bull charge in stocks.
“In this case, speculators had shorted gold over recent weeks (which is why the price overshot to the downside in the post-Crimea correction),” said Brien Lundin, editor of Gold Newsletter, in emailed comments.
“Rather than wait for the jobs number on Friday, specs moved in advance to cover their shorts, taking the money and running,” Lundin said. “This drove the price up before the jobs number was released, and the slight miss to the downside on the nonfarm payrolls report led other shorts to cover their bets as well.”
Outflows from exchange-traded funds, however, are placing pressure on gold, according to Commerzbank, which said ETFs saw outflows of 15.3 tons in the past week alone.
“Speculative financial investors have also continued to withdraw from gold: in the week to 1 April, they cut their net long positions for the second consecutive week to 91,500 contracts now – their lowest level in six weeks,” Commerzbank said.
“Falling to the lowest levels since mid-February midweek, at $1,280/oz, gold was left exposed by the diminished safe-haven bid that drove it to its highest level since September 2013,” said Barclays analyst Gayle Berry, who added that the analysts expect the “downside cushion” on gold to soften, and the metal to average $1,250 an ounce in the second quarter.
Saxo Bank’s Ole Hansen said this quarter is usually a quiet one for gold, though things could be a bit different this time around, according to Kitco News .
“If you look at the overall quarter, (the second quarter) is historically a low period for gold. Even when we were in the bull market, there were some monthly corrections in April, May and June,” Hansen said. “We had a good move to the upside in March, but there is really not any major bullish news out there at the moment, which I think will put a limit on the upside.”
Elsewhere in metals trading, July platinum PLN4 +1.00% gave up $23.10, or 1.6%, to settle at $1,427.80 an ounce, while June palladium PAM4 +1.02% also lost $23.10, or 2.9%, to settle at $767.65 an ounce. High-grade copper for May deliver HGK4 +0.46% rose nearly 2 cents, or 0.6%, to settle at $3.04 a pound.