Gold News

Gold Spikes on "Same Old Story" as US Sheds Jobs, Federal Reserve Sparks "Competitive Devaluation" Worldwide

Gold Prices jumped against the Dollar at the start of New York dealing on Friday, as the Bureau for Labor Studies said the United States shed 95,000 jobs in September.

Earlier hitting a 3-session low beneath $1326 per ounce, the Gold Price had already recovered to $1335 before spiking – briefly – above $1340 on the news.

"The daily chart shows $1320 is an important pivot," reckons Russell Browne at Scotia Mocatta, "followed by this week's low of $1312.

"A lower close [on Friday] will trigger selling of the metal from shorter-term traders."

"Consolidation is coming," a Hong Kong dealer agreed to Reuters earlier.

"We've been expecting some correction for some time...But the bullish trend is still here. We still have low interest rates, and the economy is not stable – the old story."

Today's poor US data forced a spike up in the Euro towards $1.3950, while the Dollar also slumped to a fresh 15-year low against the Japanese Yen below ¥82.

Japanese prime minister Naoto Kan said today that Tokyo wants to cooperate with its G7 partners, but will take "decisive steps" if the Yen keeps rising against the Dollar, thus making Japanese exports uncompetitive.

"I say to Europe's leaders – don't join the chorus pressing China to revalue the Yuan," said Beijing's premier, Wen Jiabao, mid-week.

Finance chiefs from the 187 member states of the International Monetary Fund are now converging on Washington for this weekend's annual IMF meeting.

"The [US] Fed...created the problem in the first place," said Nobel Prize-winning economist Joseph Stiglitz in a speech at the Canadian Consulate on Wednesday.

"[Now] it feels guilty...But the consequence of [its zero-rate] monetary policy is competitive devaluation."

Back in the Spot Gold market on Friday, prices for Eurozone investors also rose as the Dollar fell, but gold was little changed from last week's finish at €30,100 per kilo.

Germany's trade surplus slipped in August, new figures showed, but beat analyst forecasts at €11.7 billion.

New data also showed UK factory-input prices rising 0.7% last month from Sept. – some 9.5% year-on-year – as the British Pound slipped 2.3% on the foreign exchange market.

The Gold Price in Sterling rose to £840 an ounce today, while London's stock-market also cut its earlier losses.

Crude oil fell through $81 per barrel.

"Thursday was a very crazy day," says Swiss refinery group MKS in its daily note after the Gold Price dropped almost $40 from a new record top of $1364, with Silver Prices "literally flying to the moon."

"Liquidity in the [gold] market being poor, we saw great volatility with brutal price swings all through the day."

Overnight in Asian trade, "Sovereign [wealth] and quantitative fund buying still maintained the moves higher."

Buying Gold or Silver Bullion today? Cut out the middleman and get the safest gold at the lowest prices by using BullionVault...

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum 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 he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals