The gold price edged back from the four-month highs hit in the previous session in early London trading but a surge in eurozone-related safe-haven demand continued to buoy the market near $1,260.
Spot gold was last at $1,257.90/1,258.70 per ounce, down $3.40 on Friday’s close and steady within an intraday range of around $8.
Thursday’s unexpected decision by the Swiss National Bank to abandon the euro-Swiss franc exchange rate floor resulted in considerable turmoil on the financial markets and has bolstered demand for safe-haven assets.
Gold subsequently hit its highest since at $1,266.90 despite the dollar hitting 1.1567 against the euro.
The SNB abandoned the tie between the franc and the euro in a clear sign that the bank is “losing confidence in the ECB’s monetary policy, or at least no longer wishes to follow suit”, Commerzbank said in a note.
The decision comes ahead a possible announcement of broad-based government bonds purchases at the ECB’s policy meeting on January 22 given stagnant inflation in the bloc.
Coupled with a potential delay in interest-rate rises in the US because of worrying concerning jobs data and world growth concerns, reflected in falling US bond yields, gold continues to enjoy renewed demand.
“Gold is now in fresh territory… $1,245-50 should provide interim support and on the topside $1,275 will be first resistance with a view to test psychological resistance at $1,300,” MKS said in a note.
In physical markets, good demand was seen on the Shanghai Gold Exchange despite the elevated prices, MKS added.
“Up around the mid $1,260s some decent Asian selling was seen, which was not all that surprising given they have been buyers from below $1,200 up until $1,240. As a result the premium on the SGE night session dropped into discount vs. loco London gold,” it said.
In data today, the eurozone final CPI at -0.2 percent confirmed preliminary reports suggesting that consumer prices in the bloc had fallen into deflation in December. Elsewhere, the German final CPI at 0.0 percent also confirmed earlier expectations.
Later, the CPI and core CPI out of the US will be scrutinised for more clues on the state of the US economy during a crucial period ahead of possible higher interest rates. The University of Michigan’s consumer sentiment and inflation expectation figures are also due.
In the other metals, silver at $16.90/16.95 per ounce was down seven cents after hitting a one-month high in the previous session at $17.24.
Platinum also remains buoyed as a strike at a mine operated by South Africa’s Northam Platinum, a union spokesman said on Thursday.
The metal was last unchanged at $1,254/1,259 per ounce – it hit a three-month high at $1,266 in the previous session – while palladium at $764/770 was up $2.
(Editing by Mark Shaw)
The post Gold price buoyed by spike in euro-related safe-haven demand appeared first on The Bullion Desk.
No comments:
Post a Comment