US dollar gold bullion prices continued falling during Friday morning's London trading, extending losses from the previous day to hit $1,592 an ounce by lunchtime, while stocks and commodities also traded lower and US Treasury bonds gained ahead of the release of June nonfarm payrolls data.
Silver bullion fell to $27.42 an ounce – a few cents below where it started the week.
"[Gold] has been in a three month consolidation range of $1,528 to $1,640," says the latest technical analysis note from bullion bank Scotia Mocatta.
"We are either building a base, or preparing for another leg lower through $1,500."
Gold bullion fell 1.6% in less than two hours on Thursday, as monetary policy easing in Europe and China was shortly followed by a better-than-expected US jobs report. The euro meantime fell more than 1% against the Dollar, dropping back towards two-year lows at less than $1.24.
The US economy added an estimated 176,000 jobs in June, according to Thursday's privately-produced ADP Employment Report, which is published each month a day or two ahead of the official nonfarm payrolls number.
In advance of yesterday's ADP release, which was delayed from Wednesday owing to the Fourth of July holiday, consensus forecast among analysts was for an additional 105,000 new jobs to be reported.
"People are concerned that today's non-farm payrolls figures might [also] be better than expected, which will decrease the chances of quantitative easing by the Fed – bad news for gold," says Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.
Ahead of Friday's nonfarm payrolls release, analysts' consensus forecast was for an additional 90,000 private sector jobs.
By Friday lunchtime in London, gold in Dollars was down around $5 an ounce on the week, while the gold price in euros was still showing a 1.9% weekly gain following the weakening of the euro.
The European Central Bank yesterday cut its main policy rate to a new record low of 0.75%. The rate paid to banks who deposit funds with the ECB was cut to zero – prompting Denmark's central bank to push its deposit rate into negative territory at -0.2%.
"Cutting the deposit rate to zero has practically brought [the ECB] to the door of QE," says Julian Callow, chief European economist at Barclays here in London.
"They have practically exhausted their conventional armory."
"There is no such feeling that we are running low on policy options," countered ECB president Mario Draghi yesterday, when asked by a reporter if the ECB would now turn to unconventional measures.
"We still have all our artillery ready to contain inflationary risk in order to pursue the objective of price stability...on both sides [and] in both directions...I do not think I want to elaborate on further non-standard measures at this point in time."
Draghi added that asking the ECB "to act outside the limits of its mandate [risks] destroying its credibility".
Here in London by contrast, the Bank of England's Monetary Policy Committee, as widely expected, voted for a further £50 billion addition to its QE program yesterday, taking the total commitment to asset purchases to £375 billion since the policy began in March 2009.
"By merely matching market expectations the MPC has failed to deliver the 'shock and awe' it normally aims for when easing policy," says Nomura economist Philip Rush.
"The ultra-loose monetary policy of the central banks speaks for an upward trend in the gold price," says today's commodities note from Commerzbank.
China's central bank also eased policy yesterday, cutting interest rates for the second time in as many months.
"The rate cut is necessary but not enough," reckons Gao Shanwen, chief economist at China Essence Securities in Beijing.
China's vice premier Wang Qishan said Friday that the country will have difficulty hitting its official 10% trade growth target for 2012.
Chinese gold bullion imports from Hong Kong meantime – widely viewed as proxy for overall imports – fell in May for the first time in five months, according to official Hong Kong government data published Friday. Imports of gold into Hong Kong from China by contrast hit their second-highest level on record.
"Last year, scrap gold sales in the market was to the tune of 130 tonnes," says Prithviraj Kothari, president of the Bombay Bullion Association.
"But this year, scrap sales may go up to 300 tonnes."