The gold price wobbled briefly but was ultimately unaffected by a non-farm payrolls report that, while mostly positive, was not potent enough to shift the Federal Reserve’s rate-rise timeline.
Gold for February delivery on the Comex division of the New York Mercantile Exchange was last up $2.40 at $1,210.90 per ounce. Trade has ranged from $1,207.00 to $1,218.50.
Total non-farm payroll employment rose by 252,000 in December, which beat the 241,000 forecast, while the unemployment rate declined to 5.6 percent, the US Bureau of Labor Statistics reported today.
Additionally, the change in total non-farm payroll employment for October was revised to 261,000from 243,000 and the change for November was revised to 353,000from 321,000.
But the report sounded several worrying notes. The labour force participation rate edged down by 0.2 percentage points to 62.7 percent in December, while average hourly earnings fell five cents to $24.57 following an increase of six cents in November.
Labour reports over the next several months will take on added significance because the Federal Reserve in on the verge of raising interest rates. The current market consensus is that rates will rise in mid-2015 although this is a moving target that will be dictated by jobs and inflation data.
In wider markets, the dollar strengthened following the jobs report – it was last up 0.06 percent at 1.1785 against the euro, while Germany’s DAX and France’s CAC-40 were down 0.52 percent and 0.67 percent respectively although US stock futures are trending higher.
Elsewhere, the European Central Bank is expected to announce large-scale sovereign QE at its January 22 meeting, UBS analyst Edel Tully said.
“Large-scale sovereign QE should be positive for gold, particularly on two accounts: because of the factors driving the ECB to embark on sovereign asset purchases in the first place (cause), and because of the consequent liquidity provision (effect),” Tully said.
Historically, there is a positive correlation between gold prices and central bank balance sheet expansion but it makes a considerable difference which central bank is doing QE. The Federal Reserve’s quantitative easing programme was first announced seven years ago and was gold’s biggest upside catalyst.
“For the ECB, the positive impact on gold could be limited by euro/dollar weakness. Downside pressure on the euro on the back of divergent macroeconomic fundamentals and policy trajectories between the ECB and the Fed would further fuel dollar strength, and the currency impact would in turn weigh on gold,” Tully said.
In other data today, the Chinese CPI at 1.5 percent was in line with expectations although the PPI at -3.3 percent was short of forecast.
The German trade balance fell short at 17.7 billion euros as did industrial production at -0.1 percent. The French trade balance at -3.2 billion euros was better than expected although industrial production disappointed at -0.3 percent.
In gold-specific data, Russia’s central bank increased its gold holdings by 18.8 tonnes over the past month, according to the latest monthly report from the World Gold Council.
Its total gold reserves now stand at 1,187.5 tonnes, accounting for 10.8 percent of its total reserves, sustaining Russia’s position as the sixth-largest holder of the yellow metal in the world, WGC figures show.
“Gold in roubles has rallied by over 100 percent this year, so that led to the obvious speculation that the Russian government might sell some of its gold reserves in order to raise cash, which it desperately needs,” Bob Alderman, head of wealth management for Gold Bullion International (GBI) and former WGC managing director, told FastMarkets.
“We believe that’s pretty unlikely and they could even start buying more gold. Putin understands the value of gold – that there’s no counterparty risk so it’s immune from sanctions,” Alderman added.
In the other precious metals, Comex silver for March delivery was unchanged at $16.39 per ounce. Trade has ranged from $16.210 to $16.440.
Platinum futures for April delivery on the Nymex were up $1.50 at $1,224.50 per ounce, while the most-actively traded palladium contract was at $793.35, up 25 cents.
(Editing by Mark Shaw)
The post Gold steady after strong US jobs report appeared first on The Bullion Desk.
No comments:
Post a Comment