Gold edged modestly higher in London trading on Friday morning buoyed by the prospect of Greece’s defaulting on its debts, although the focus is broadly on the blockbuster US jobs report due later.
Spot gold was last at $1,264.80/1,265.60 per ounce, up 20 cents and confined to a tight $4 intraday range. Other metals were equally slow, with silver up five cents at $17.25/17.30 per ounce, platinum $8 higher at $1,250/1,260 and palladium up $5 at $791/797.
The prospect of a Greek default after the ECB said it will no longer accept junk-status government bonds as collateral on financing continues to play on the markets.
“The broader issue of what kind of agreement Greece will reach with its lenders – if any – remains unresolved and will continue to dog the markets for some weeks to come,” INTL FCStone’s Ed Meir said.
“We find it interesting that the euro seems to be strengthening through all this, possibly indicating that traders may be looking at a possible Greek exit to be bullish for the currency,” he added.
The euro was last at 1.1455 against the dollar, down around 0.2 cents but up more than 3.5 cents on recent 11-year lows.
The dollar has also come under pressure from a 17.1-percent rise in the US trade deficit to $46.6 billion, the largest since November 2012.
Peace talks in Ukraine and Russia will dampen the prospect of further safe-haven buying, with French President Francois Hollande and German Chancellor Angela Merkel set to meet Putin in Moscow today to outline a new ceasefire agreement.
But the primary focus will be on the US jobs report, which will be scrutinised for clues as to when the US may raise interest rates from near-zero.
US non-farm payrolls data for January is expected at 236,000, below the December total of 252,000, while the national unemployment rate is expected to stay steady at 5.6 percent.
Slack in the labour markets, static inflation and concerning world growth prospects are seen staying the Fed’s hand – it had been expected to raise rates some time in the middle of the year
“We feel other factors such as US inflation and how the rest of the world’s economy is doing might well become important factors for the FOMC,” FastMarkets analyst William Adams said. “Given these issues, plus the weaker-than- expected US trade data, we feel a US rate rise will be delayed.”
In other data today, German industrial production for December at 0.1 percent missed the forecast 0.4 percent, although the previous month’s reading was revised upwards to 0.1 percent.
The French trade deficit at 3.4 billion euros was wider than the expected 3.1 billion euros and the previous month’s 3.2 billion euros.
(Editing by Mark Shaw)
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