Gold price unmoved, market digests eurozone data

Otmane El Rhazi from The Bullion Desk.

Gold was tightly rangebound on Wednesday morning after mixed eurozone data counteracted early weakness in the dollar.

The spot gold price was last at $1,194.10/1,194.90 per ounce, up $2 on Tuesday’s close. It peaked at $1,196.40 earlier.

“Overall, the market remains illiquid and dull,” Marex Spectron’s David Govett said. “I would look for a possible move towards $1,200 now that the downside has held several times in the last few days. Otherwise I won’t be holding my breath for much in the way of excitement.”

Positive growth figures this morning initially pushed the dollar back to 1.1265 against the euro but it was last at 1.1230 after the eurozone flash GDP at 0.4 percent and industrial production at -0.3 percent missed the forecast 0.5 percent and 0.1 percent respectively.

In other data today, French preliminary GDP was better than expected at 0.6 percent – the highest level since the second quarter of 2013 – and the Italian figure at 0.3 percent raises hopes that the country may be free of its longest recession on record. This was the first time economy has grown since February last year.

But the German reading of 0.3 percent missed the predicted 0.5 percent. German final CPI at 0.4 percent was as expected and French CPI undershot at 0.1 percent.

While general growth is slow, the figures suggest that the eurozone economy is moving in the right direction some two months after the ECB initiated its quantitative easing programme.

In other data this morning, Chinese industrial production at 5.9 percent missed the forecast 6.1 percent, fixed asset investment was lower at 12 percent and retail sales undershot at 10 percent.

New loans at 708 billion yuan were lower than the expected 1.21 trillion yuan and M2 money supply at 10.1 percent undershot the forecast 11.9 percent.

Still to come this afternoon out of the US are retail sales data, business inventories and import prices, which may add some volatility to currency markets. Negative reads may pare some of the dollar’s recent gains and could push gold towards $1,200.

In the other metals, silver was last up 17 cents at $16.64/16.69 per ounce while palladium was $4 higher at $785/790, as was platinum was $1,131/1,136.

(Editing by Mark Shaw)

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