Gold slides 0.3% after ECB decision; oil drops 1.1% to $94.45

September 4, 2014

Frankfurt (Sept 4)  Gold ended lower today as investors weighed the negative impact from a weaker euro and surging global shares after the European Central Bank cut interest rates to record lows, and the impact of lower than expected U.S. jobs data.

Gold for December delivery, the most active contract, fell 0.3 percent to finish at $1,266.50 a troy ounce on the Comex division of the New York Mercantile Exchange.

The ECB cut its main refinancing rate to 0.05 percent from 0.15 percent and lowered the rate on bank overnight deposits to -0.20 percent.

Data showed U.S. companies hired 204,000 workers in August, below analyst projections and the level set in July.

Global equities rose and the euro fell sharply versus the dollar after the ECB rate move, which lifted gold priced in euros by one percent to 973 euros an ounce.

The ECB is under strong pressure to tackle stubbornly low inflation at a time when the conflict in Ukraine threatens to destabilise the region's fragile recovery.

In other metals, Palladium posted its steepest gain in nearly three months on escalating tensions between Russia and Ukraine.

Palladium for December delivery, the most active contract, rose or 1.7 percent to settle at $891.00 a troy ounce on the Nymex.

Russia's foreign minister said today that Ukraine's ambitions to join the North Atlantic Treaty Organization are endangering attempts to reach a cease-fire between Kiev and pro-Russia separatists in Eastern Europe.

NATO's civilian head Anders Fogh Rasmussen said Russian forces continue to destabilize Ukraine, even as the sides are to hold talks Friday in the first steps toward the peace process.

Some investors worry that Western trade sanctions against Russia, the world's top producer of palladium, or retaliatory trade curbs by the Kremlin will disrupt supply of the metal to the market. Russia accounts for about 40 percent of global palladium supply, and the majority of the metal is used by the automotive industry in exhaust filters.

In energy markets, West Texas Intermediate crude fell after a government report showed that U.S. refineries reduced operating rates as the peak driving season came to an end.

WTI for October delivery dropped 1.1 percent to close at $94.45 a barrel on the New York Mercantile Exchange.

Brent for October settlement slid 0.9 percent, to end the session at $101.83 a barrel on the London-based ICE Futures Europe exchange.

Refineries operated at 93.3 percent of their capacity last week, down 0.2 percentage point from Aug. 22, according to the Energy Information Administration. Refiners schedule maintenance for September and October as they transition to winter from summer fuels.

Source: ProactiveInvestors

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