Having risen 0.55% last week, the U.S. Comex gold futures fell in the past three days by 1.75%, ending at $1,765. The gold futures did not trade above $1,800. The S&P 500 index and the Euro Stoxx 50 index retreated 1.33% and 2.33% respectively while the CRB Commodity index rose 0.48% and the Dollar Index rebounded 0.78% in the past two days.
Last Friday, the U.S. reported a September unemployment rate of 7.8 percent compared to an expected 8.2%. The last time unemployment rate was in the seven handle was in January 2009. The September non-farm payrolls were 114,000 compared to 115,000 from the Bloomberg survey although the revised August data was 142,000, higher than expected.
Gold price weakened on expectations on weak industrial numbers from Italy and France and retreated as a response to various multilateral organizations lowering global economic growth. The Italian August industrial production could contract 0.5% while that of France could contract 0.3%, according to economists' surveys. The International Monetary Fund (IMF) before the IMF-World Bank meeting in Tokyo revised downward its projection of developed market growth to 1.5% from 2% in 2012 and that for the global economy to 3.3% in 2012. Worries on economic growth momentum tend to weaken gold price sentiment.
In the EU discussions today, the Finance Ministers seemed to agree that the supervisory and oversight banking body will not meet the original proposal date of early 2013 due to concerns that banks outside the euro-area could be hurt, according to Bloomberg. At the same time, Spain has not requested the ECB to buy its bonds yet. The IMF further warned that the ECB bond-buying programme has to be perceived as a real plan by investors.
According to Barclays, physical demand for gold has shown signs of life although macro development in the U.S. and Europe will continue to affect near-term outlook for gold price. Year-to-date to first week of October, gold-backed ETP inflows reached 192 tonnes, higher than the inflows for 2011 of 175 tonnes.