Big drop for bullions

Mixed finish for precious metals on a monthly basis

Bullion metals ended substantially lower on Thursday, 31 October 2013. Gold futures fell by more than $20 an ounce on Thursday, as traders mulled the timing of a scale back in the Federal Reserve's bond-buying program. The Fed on Wednesday maintained the pace of bond-buying, but kept tapering plans on the table.

Gold for December delivery lost $25.60, or 1.9%, to settle at $1,323.70 an ounce on the Comex division of the New York Mercantile Exchange.

December silver was hit even harder, giving up $1.12, or 4.9%, to end at $21.87 an ounce.

For the month of October 13, the metals showed a mixed performance. Gold futures saw 0.3% loss following September's 4.9% decline, while silver tacked on 0.7% after a 7.7% drop in September.Year to date, gold futures have lost over 20% while silver's down over 27%.

In overseas news of note, eurozone unemployment (12.2% actual versus 12.0% expected) and CPI (0.7% actual versus 1.1% consensus) came in well-below estimates, which stoked expectations for additional liquidity provisions from the European Central Bank.

Economic data at Wall Street showed that weekly initial claims decreased to 340,000 from 350,000 (consensus 335,000). This initial claims report represented the first clean reading for the labor market since August as issues with California's numbers have now been ironed out. Unfortunately, the report reflected a modest increase in layoff levels over the past couple of months. The continuing claims level increased to 2.881 million from a downwardly revised 2.859 million (from 2.874 million). The consensus pegged the continuing claims level at 2.850 million.

Separately, the October Chicago PMI registered its largest one-month spike in more than 30 years, jumping to 65.9 from 55.7 (consensus 55.0). We are skeptical that the sharp increase is legitimately showing vast improvement in the manufacturing sector. Most of the Federal Reserve regional manufacturing surveys were either flat or softened slightly from lost demand due to the government shutdown. In contrast, the manufacturers in the Chicago region recorded their strongest activity since March 2011.

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