Caledonia Mining Corporation (CMCL)

[TPX]

Gold price holds up despite soft EU manufacturing data

Apr 23, 2015

Gold made modest gains on Thursday morning, with a spate of forecast-missing European manufacturing numbers having a limited impact on currency markets.

The spot gold price was last at $1,188.40/1,189.20 per ounce, up $1.50 on Wednesday’s close and confined to a tight $6 intraday range so far.

Despite all European, Japanese and Chinese manufacturing PMIs missing forecasts, the dollar was almost unchanged at 1.0728 against the euro.

The French manufacturing PMI at 48.4 fell short of the 49.4 consensus, as did the services component at 50.8 compared with expectations of 52.5. The German PMI also disappointed at 51.9 against the forecast 53.1, with the services PMI at 54.4 against expectations of 55.6.

The overall Eurozone growth pulled back from March’s 11-month high, reflecting the weaker rates of expansion in France and Germany. The overall manufacturing PMI at 51.9 was short of the 52.6 consensus, as was the services number at 53.7 against forecasts of 54.5.

Earlier, the Chinese HSBC flash manufacturing PMI at 49.2 fell short of consensus at 49.5, while Japan slipped into a decline at 49.7 against expectations at 50.8.

Despite the misses, the euro held up strongly, allowing gold to make modest gains in early trading. Still, the manufacturing PMI is due from the US later in the session as well as weekly unemployment claims and new home sales.

“One would have expected the euro to ease as equities have – the Dax is off 1.2 percent. It seems likely the US data will be soft too because the strong dollar has reduced export demand and higher imports will have damaged domestic manufacturing too,” FastMarkets William Adams said.

“It may be a case of an ebbing tide taking all boats down with it, which for currencies means they stay stable relative to each other,” he added.

In other metals, silver was last 12 cents higher at $15.88/15.93 per ounce, while platinum was up $4 at $1,129/1,134, as was palladium at $755/760.

China’s imports of precious metals varied in March, with net platinum imports rising to 9.3 tonnes from 7.3 tonnes in the same period of last year. Palladium imports fell to 2.2 tonnes from 2.4 tonnes last year while silver imports fell 53 percent to 53.3 tonnes.

“The combination of the price break below the psychological $1,100 per ounce level and platinum trading at up to a $65 per ounce discount to gold, seen at the end of March, may have encouraged China’s appetite for platinum,” HSBC’s James Steel said.

“The sharp rise in platinum imports for March may have also eased concerns over a build-up of supply in China given that net imports recently hit a record low of 2.2 tonnes in February,” he added.

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