Gold spot price rebounding despite upbeat US data

on Nov 28, 2013
Updated: Oct 21, 2019
Listen Thursday, November 28th:_ The XAU/USD yesterday opened at 1243.44 and then started to rise, with the upwards movement meeting the upper line of the descending channel within which the pairing has been trading since 28 October. The spot price then retraced on a data-fuelled strengthening of the dollar.

The US Department of Labor reported last week’s Unemployment Insurance Initial Claims at 316,000, well below the expected 330,000 and the prior 326,000, revised up from 323,000. The Chicago Purchasing Managers Index fell to 63.0 points in November from 65.9, comfortably beating the expected 60.6. Revised UoM Consumer Sentiment grew to 75.1 points in November from 72.0 in October, versus expectations for 73.1. And the CB US Leading Index m/m increased by 0.2 percent in October, beating the consensus for a 0.1 percent rise.

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The strong US data has re-stoked speculation of a taper by the Federal Reserve of its $85 billion per month bond purchasing programme at the next FOMC meeting on 17-18 December.
VTB Capital’s Andrey Kryuchenkov observes today that “the story for gold remains pretty much the same… and the drivers for now remain the dollar and the US data”. He sees the next supports to the downside at 1220.00 and 1200.00.

In the wake of the upbeat US data releases, the spot price of gold fell to a low at 1234.18 before rebounding slightly to close at 1238.21, losing 0.52 percent intraday.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 5.7 tonnes to 843.21 yesterday, the lowest holding since early 2009.
The US Dollar Index is today down 0.2 percent and spot gold has taken advantage to be currently at 1243.58, right at an 89-hour simple moving average which has been offering resistance for the past six hours.

The trading range thus far today has been from 1236.43 to 1244.83. Volatility is expected to be lower today with the Thanksgiving holiday in the US keeping traders away from their monitors.

Today’s uptick has also been supported by strong Chinese demand. According to Reuters data, traded volumes of 99.99 percent purity gold on the Shanghai Gold Exchange hit 18.3 tonnes in Asian trading today – the highest since 8 October.

CNBC is reporting today that market-correcting production cuts in the mining sector may follow if the price of gold drops below 1200.00.
And Mark O’Byrne of Dublin-based gold dealer GoldCore observes that “gold production may fall at prices below $1,200 as it becomes uneconomical for many mines to operate profitably”.
The following chart compiled by shows that the gold long-term trend is still intact and that the price has been in ascent since 2001.
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