Gold News

Gold Shrugs Off Dollar-Bullish US Jobs Data, Eurozone "Uncertainty" Sees New 16-Month High at €1029

GOLD in DOLLARS recovered a brief dip below $1210 per ounce after stronger-than-forecast US jobs data Wednesday, standing 2.0% higher for the week so far as world stock markets rallied from recent falls.
 
US stock markets opened 0.8% higher and France's Cac40 gained 1.2% for the day despite the murder of 12 people at satirical weekly Charlie Hebdo in Paris by gunmen apparently claiming vengeance for the prophet Mohammed over recent cartoons.
 
Ahead of Friday's official estimate from the US Bureau of Labor Studies, private-sector data from payrolls provider ADP today put December's US jobs growth at 241,000 – the strongest net addition since July's 30-month high.
 
Trading at $1212 per ounce, the Dollar gold price held $10 below Tuesday's new 3-week highs after separate data put the US trade deficit at an 11-month low for November, smaller than analysts forecast.
 
Euro-priced gold meantime extended yesterday's surge, hitting a new 16-month high above €1029 per ounce after news that Eurozone inflation fell to minus 0.2% across the 19-nation union in December, pulled down by falling oil prices.
 
Brent crude today joined US oil below $50 per barrel for the first time in 5.5 years before rallying 2.5%.
 
Unemployment amongst the Eurozone's 330 million citizens held flat at 11.5% in November, according to Eurostat.
 
But on national data, Germany's jobless rate fell to new record lows last month, whilst reaching fresh highs in Italy.
 
German newspaper Bild says Berlin is making "contingency plans" for possible bank runs in the event Greece leaves the currency union after this month's snap elections, led by anti-austerity party Syriza.
 
Greek 10-year bond yields rose Wednesday above 10% for the first time since mid-2013.
 
"To add fuel to the fire," says one commodities trading desk, "central banks are reducing reserves held in Euros," noting a Bloomberg report estimating global Euro holdings fell 8.1% in Q3 2014, outpacing the Euros 7.8% decline vs. the Dollar over that time.
 
"Outside the US," says a 2015 outlook from Australian bank Macquarie, "uncertainty is the name of the game. But in general 'events' look at least as likely to be bullish for gold as bearish."
 
But "we expect gold to return to its downward trajectory," says a new 2015 forecast from London market makers Barclays' precious metals analyst Suki Cooper.
 
"In fact," says Cooper – forecasting a drop to average prices of $1150 per ounce next summer – "at prices above $1200 we think gold presents a selling opportunity. The underlying trends do not look supportive."

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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