Spot gold price advanced by almost 0.5 percent last week to close at $1252.78 a troy ounce. As of 08:13 BST today, it had climbed a bit further and was trading at $1253.67. Bullion was hurt on Friday by US jobs data that failed to disappoint and met market expectations. Although the price subsequently managed to recover, its gains were limited by a rally in stocks which reduced its appeal as an investment hedge. As no major economic releases are scheduled for today, market participants are likely to seek direction based on investment and retail demand for the precious metal. Bullion’s 60-day historical volatility last week reached its lowest level since April 2013, and the value of exchange-traded products backed by gold price declined by $2.6 in May, the most so far this year.
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"Right now, nobody wants to play big on gold because they are all looking at equities," a precious metals trader told Reuters. "With consumer demand also weak and the Ukraine situation quiet, there aren't much bids out there for gold," he added.
Asian equities managed to hit their highest levels in almost three years today, following record closes in the US on Friday as employment figures indicated improving economic conditions. Both the Dow and the S&P 500 jumped past all-time closing highs, as government data showed the labour market passed a milestone with all the 8.7 million jobs lost in the recession regained. This marked the indexes second straight day of record-breaking closes, and their third of the week. Global stock markets grew by $1.1 trillion in value last month.
US employment climbed to its pre-recession peak in May, offering further evidence to those who argue the world’s largest economy has managed to come out of a winter slowdown. Nonfarm payrolls grew by 217,000, according to the US Labor Department on Friday.
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“The continued strength of the equities market has driven interest out of gold for the better part of the last two and a half years,” Sean Lusk of Walsh Trading, said in an interview with the Wall Street Journal. “That could weigh on the metal again […] as the major planned news events are done, and [this] week’s U.S. economic calendar is light,” he added.
The Commodity Futures Trading Commission revealed on Friday that large investors reduced their wagers on an increase in gold futures and options in the week ended June 3 to their lowest level since mid-January.
“Prices will remain range-bound as there is no big catalyst to push it one way or another,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, told Bloomberg in a telephone interview.
Assets of the Mitsubishi UJF Trust and Banking Corp’s exchange-traded gold fund jumped to a record as cheaper bullion managed to attract investment demand in Japan. Holdings in the fund, the biggest of its kind in the country, reached an all-time high of 7.034 metric tons on June 2, according to data from the bank. “In Japan, gold has been attracting more interest as a hedge against inflation and the weaker currency,” Itsuo Toshima, the founder of gold consultancy firm Toshima & Associates, told Bloomberg. Globally, however, bullion-backed exchange-traded products have fallen by about 2.6 percent so far in 2014, to 1,717.84 tons, according to data compiled by the news agency.