Gold price ranges narrowly around $1,200, US jobs data in focus

Otmane El Rhazi from The Bullion Desk.

The gold price held its ground above $1,200 once again on Friday morning London trading, with all eyes on the US blockbuster jobs data for near-term direction.

Spot gold was last at an unchanged $1,203.80/1,204.60 per ounce and confined to a tight intraday range – as is typical ahead of the monthly non-farm payrolls data – of just $5.

After a brief rally, bullion slipped from session highs around $1,213 on Thursday afternoon after European Central Bank president Mario Draghi said that the bank will not consider purchasing gold as part of a quantitative easing programme.

“Draghi said policy makers discussed buying all assets except gold,” HSBC’s James Steel said. “Draghi’s comments came as a surprise to the bullion market [because] ECB members had discussed buying gold among other potential assets as part of the ECB’s stimulus programme.”

Rather than changing monetary policy on this occasion, the ECB will await the results of its ABS and TLTRO programmes before deciding whether to launch further unconventional policy measures to stoke inflation towards its target of two percent target from its current level of 0.3 percent.

Elsewhere, reports suggesting that the Reserve Bank of India is unlikely to revise the duty on gold imports has also weighed on the price, following the removal of the rule that made it mandatory to export 20 percent of all imported material last week.

But the RBI could still implement an annual cap on the amount of gold coming into the country, sources told FastMarkets.

Today’s main focus is US non-farm jobs data, forecast at 231,000 after last month’s 214,000. A positive reading would give the greenback another boost, putting gold prices under heavy downside pressure.

The dollar has already climbed this morning after Germany halved its 2015 growth outlook to one percent from two percent while downgrading 2014 growth to 1.4 percent from 1.9 percent in June.

But a negative reading could be the near-term catalyst needed to break gold from its tight new range of $1,200-1,210 per ounce, with a break above the December high of $1,222.10 eyed.

“Failure to take advantage of this set-up runs the risk of leading to disappointed long liquidation,” FastMarkets analyst William Adams said.

In other data today, Japanese leading Indicators at 104 percent was as predicted, while German factory orders at 2.5 percent beat the forecast 0.6 percent.

The US trade balance, unemployment rate, average hourly earnings, factory orders and consumer credit figures are also due later.

In other metals, silver was unchanged at $16.41/16.46 per ounce, while platinum at $1,234/1,239 was up $5 and palladium gained $8 to $799/804.

(Editing by Mark Shaw)

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