Gold Price Steady, U.S. Inflation Remains Tepid

The gold price held firm near $1,735 per ounce Friday morning after the U.S. Consumer Price Index provided the Federal Reserve with additional evidence to support its slew of accommodative monetary policies.  The spot price of gold maintained a slight gain after the January CPI reading of 0.2% came in below the 0.3% consensus estimate among economists.

The markets and gold price rebounded after German newspaper Die Welt reported that the European Central Bank (ECB) plans to engage in a Greek debt swap in order to more effectively alleviate the nation’s financial condition.  The euro currency extended its gains against the U.S. dollar following the report, rising from an intra-day low of 1.2976 to 1.2135.

Under the terms of the proposed swap, the ECB would exchange the Greek bonds it presently owns for newly issued ones with a longer maturity, so as to give Greece further time to attempt to rectify its fiscal challenges.   Euro zone officials are expecting the plan to reduce the likelihood of a deflationary debt spiral, which in turn would raise the prospects for higher asset prices.

The gold price also received support from the World Gold Council (WGC), which published its 2011 Gold Demand Trends report.  The WGC announced that global demand for gold surpassed $200 billion last year for the first time ever.  “The main driver for this increase was the investment sector where annual demand was 1,640.7t up 5% on the previous record set in 2010 and with a value of US$82.9 billion,” the report noted.  “The pre-eminent markets for investment demand in 2011 were India, China and Europe.”
Marcus Grubb, Managing Director, Investment at the WGC commented that “What we can see from these 2011 figures is that there were two main factors driving the results: Asian growth and optimism on the one hand and western desire to protect assets against uncertainty on the other…What is certain is that the long-term fundamentals for gold remain strong, with a diverse and growing demand base, coupled with constrained supply side activity.”

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also waiting
Read more

Gold Price Futures (GC) Technical Analysis – Trader Reaction to Minor 50% Level at $1954.80 Sets the Tone

Image
  Gold futures closed lower on Thursday but up from its low of the session as investors battled a number of factors including U.S. economic data and outside market influences. Earlier in the session, gold fell over 1%, as positive economic data elevated hopes for a quick recovery while dampening the investment appeal of the precious metal. On Thursday, December Comex gold futures settled at $1937.40, down $11.60 or -0.60%. On the data front, a drop in U.S. jobless claims reported Thursday and positive manufacturing data reported earlier in the week are taking some shine off gold. A weaker Euro is also weighing on dollar-denominated gold by driving up thU.S. Dollar Index. U.S. weekly jobless claims fell below 1 million last week for the second time since the pandemic started, but did not signal a strong recovery in the labor market because the drop largely reflected a change in the methodology used to address seasonal fluctuations in data. Earlier in the week, a report s
Read more

India, not Trump, is the real reason behind the crash in gold prices

Image
If you have been puzzled about the crash in gold prices after Donald Trump's election, you are in the company of almost every analyst and media outlet in the western world. Gold and silver are a major part of the research at The Arora Report. A combination of our proven precious metal algorithms, extensive resources and knowledge of the emerging markets led us to alert subscribers to The Arora Report early that gold was about to crash and the reason behind it. Immediately after the election, the net position of The Arora Report in gold, silver and miners has been short as part of a sophisticated strategy.
Read more