Gold shrugged off the dollar’s move to multi-year highs early on Monday, with its fundamentals beginning to dominate the near-term outlook.
The spot gold of $1,195.20/1,196.00 per ounce was up $3.20 on the pre-weekend close, having held above the previous breakdown level at $1,180 on Friday following better-than-expected US non-farm jobs data.
Although gold fell below $1,200 after the US reported 321,000 new non-farm jobs were created in November, the largest gain since January 2012 and 90,000 above forecast, it has since shrugged off the subsequent climb to a fresh two-year high against the euro at 1.2255.
“The bears have had their noses bloodied over the last couple of weeks and the appetite for shorting gold as it falls is very much out of favour,” Marex Spectron’s David Govett said. “Prices finished lower, but overall given the scale of the [US non-farm payroll] number, the market held pretty well.”
He reiterated his belief that gold this month will trade no higher or lower than it has already and that an increasingly erratic marketplace will dissuade investors.
The market appears to be benefitting from improving fundamentals, continual reductions in short-covering and uneasy worldwide economic conditions, particularly in Asia. India’s removal of the 80:20 rule on gold imports has also provided a prop to prices, Barclays said in a note.
“Gold has significant headwinds to overcome in the form of a stronger dollar and the prospect of rate hikes, but the floor for prices has firmed somewhat following India’s announcement that it would lift its trade restrictions,” the bank added.
And gold shorts have also been consistently declining, UBS said, which has been the backbone of the metal’s resilience at $1,200 over the past three weeks.
Gold shorts have declined by a total of 4.5 million ounces or 28 percent to 11.8 million ounces as of December 2, the latest CFTC data shows, which is the lowest level since the start of September.
In data today, the Chinese trade surplus widened to $54.47 billion in November from $45.41 billion in October and was above the forecast $44.3 billion. But growth in exports of just 4.7 percent – below the expected 8.2 percent – will exacerbate fears of a sharper economic slowdown in the region, boosting expectations of additional stimulus measures from Beijing.
“While it could boost expectations on additional easing, weak data flow is fostering the perception that Chinese authorities are not doing enough soon enough,” MKS said in a note.
Out of Japan, the economy watchers sentiment at 41.5 disappointed, while final GDP at -0.5 percent was worse than the expected -0.1 percent.
In other data, EU Sentix investor confidence at -2.5 beat the forecast -9.9 while German industrial production was as expected at 0.2 percent.
In the other metals, silver at $16.32/16.37 per ounce was up eight cents and trading within a 20-cent intraday range, while platinum at $1,229/1,234 was up $12 and palladium at $802/807 was up $8.
(Editing by Mark Shaw)
The post Gold price shrugs off 2-yr high in dollar, sentiment improving appeared first on The Bullion Desk.
No comments:
Post a Comment