Gold prices sank at the start of New York trade on Friday, dropping 2.5% to hit 3-week lows beneath $1235 per ounce after new U.S. jobs data came in much better than analysts forecast.
The Non-Farm Payrolls report for January estimated last month's net U.S. jobs growth at 257,000 against Wall Street's consensus for 234,000, with December's figure revised 30% higher to 329,000 – the second-best month since June 2010.
The U.S. unemployment rate ticked higher to 5.7% however, as 703,000 people were estimated to have joined the labor force.
"The better than expected figures quickly saw gold retreat...having a battle," said a note from London dealers Standard Bank's commodity unit, now owned by China's giant ICBC Bank.
Now halving 2015's previous 10% gain of late January, gold priced in Dollars fell almost $15 per ounce within two minutes.
Gold priced in Euros also tumbled, breaking below Tuesday's 3-week low at €1091, even as the single currency fell hard against the Dollar.
Friday's new U.K. trade data said gold bullion exports, net of imports, totaled 468 tonnes in 2014, two-thirds below 2013's record outflow from London's specialist bullion vaults – the central storage point for wholesale Good Delivery bars dealt worldwide.
Gold demand in China – the world's No.2 consumer nation behind Indian – fell 25% from 2013's record to 886 tonnes last year, the China Gold Association said today.
China's gold mining output – the world leader since 2007 – rose 5% to 452 tonnes, the government-approved industry association added.
"The precipitous drop in prices in 2013," says the China Gold Association, "led to an increase in demand of extraordinary proportions.
"[But] the relatively stable price in 2014 suppressed investment demand."
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"Last year," says Kim An-mo of Korea Gold Exchange 3M, which reports turning over $700m in its last financial year, "investors bought gold in bargain hunting as the metal's price was declining.
"But now they buy gold to avoid possible financial losses related to territorial disputes, possible defaults in debt-ridden countries, falling oil prices and record-low interest rates."
Thursday saw the New York-listed SPDR Gold Trust (NYSEArca:GLD) add more metal to back the value of its shares for the 10th day in three weeks – a pattern only seen or bettered after the Lehmans crash in October 2008, the stock-market lows and start of U.S. Fed QE in February 2009, the first Greek crisis of May 2010, and the approach of QE3 in the U.S. in late 2012.
Extending its heaviest inflows since August 2011, the metal held to back GLD shares has now recovered almost 10% from the fresh 6.5-year lows hit at New Year 2015.
The GLD's backing remains 40% below that ETF's end-2012 peak by weight, and 60% down by value from its Dollar peak.
"The fact that [Western] ETF investors and funds have been buying is very noteworthy," says a new monthly report from London market makers Scotia Mocatta's New York office.
"[So too] is the fact that gold prices have been able to rise while the Dollar is strong and oil is weak."
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