Gold Price Movements 5th Jan (Part 2)

As promised Adrian Ash is still talking about the odd price movements in Gold see Bullion Vault
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Ok so back to Adrian;

Gold sank in US trading after the much-anticipated US jobs report came in well ahead of Wall Street's expectations.

Gold dropped to $609 per ounce at the PM Fix in London. It was marked at $625 only four hours earlier. Technical analysts had cited $620 as key support.

"You're getting liquidation on the back of the strengthening Dollar," said Michael Guido, director of hedge-fund marketing at Societe Generale in New York to Bloomberg. "Obviously this number is a big surprise."

The Labor Dept. said at 13:30 GMT on Friday that the US economy added 167,000 jobs in Dec. Economists had been expecting nearer 100,000. The data also showed average US wages rising by 0.5% against 0.3% as expected.

A cut in US interest rates any time soon now looks unlikely – and that has sent the US Dollar higher across the board. But gold's sharp losses also extend to Sterling, Euro and Yen investors.

Gold has now lost nearly £10 per ounce for British investors.

French and German buyers are offered a €13 discount from this time last week.
"Right now investors are cautious about stepping into gold given this week's Dollar strength," says David Holmes, director of precious metals sales at Dresdner Kleinwort in London. Yet retail investors are sticking with it, according to data from the gold ETFs.

Exchange Traded Gold says it's holding 18.142 million ounces of gold today, barely changed from last week after a 3.3% rise in volume during Dec.
So if it's not retail investors selling out, who's dumping gold?

Gold has fallen $22 this week, a 3.5% drop. The US Dollar, meantime, has risen only 1.4% on a trade-weighted basis. And news earlier this week that a major European central bank bought gold – instead of selling it – at the end of Dec. has signally failed to support the market.

"For the clueless out there who still don’t understand," said an email to BullionVault on Thursday, "the gold market is managed by a Gold Cartel...Free markets do not trade this way."

Oh yeah? No one ever pretended the gold market was free or transparent. Central banks, after all, hold more gold than anyone else. Why act surprised if they try to rig prices?

Nor is gold a free ride to easy gains, either. Its volatility since the start of 2006 has wildly outstripped the volatility of US equities, for instance. And all this while, the global market turns over 1,500 tonnes every day or more.

If the world's central banks have indeed lent and loaned 3,000 tonnes into the market, as some conspiracists claim, they're up against a huge international market that's fragmented, volatile and opaque.

And whatever they might be up to in the spot market for gold, central bankers are doing all they can to send its price soaring in future.

Well, as I announced last night Gold is the place to be, just look at what Adrian Ash writes about the Stockmarket and Derivatives at Bullion Vault