Gold & Silver Daily Market Recap: May 3rd, 2012

Spot gold lost more ground as the European Central Bank (ECB) shied away from announcing more stimulus despite the deteriorating conditions in the Eurozone.

ECB president Mario Draghi reduced hopes of fresh monetary stimulus holding the line on interest rates at 1% even though economic indicators, including manufacturing and employment data, have been trending in the wrong direction recently. Draghi stated...

“Economic activity is expected to recover gradually over the course of the year. At the same time, as we said previously, the economic outlook continues to be subject to downside risks”

The yellow metal didn’t take the news in stride and it quickly dropped to the $1638 level before more selling entered the market taking it to its low of the day at $1631. Traders were disappointed that the ECB didn’t give a stronger indication of stimulus, but he could also be indicated that he would like the governments of the various countries to get their act together before the ECB provides more funding.

“It appears as if precious metals in particular, but commodities in general, just can’t win. Improving PMI readings out of China and the US caused investor interest in the complex to wane” said Standard bank in their daily note.

U. S data was slightly better as Initial Jobless claims in the U.S fell 27,000 last week to 365,000, beating expectations of a 381,000. But the previous week’s figure was revised up to 392,000 from 388,000. Not a great number but better than what has been happening since Easter Weekend. Economists say while this is encouraging they still need to see many weeks of declines to see if the Easter weekend was a cause for the jump in claims.

There is a wait and see attitude for tomorrow’s non-farm payrolls, while the metals complex was off $20 most can be attributed to long liquidation as traders square positions ahead of the key data.

Spot silver’s trajectory was lower as well, touching its lowest market since April 24th of $29.88. The gold silver ratio still within its range but moved to the top end of its range at 54.57.

May 3rd Closing Prices