Gold spot price: Down to post-5 July low on upbeat US data; rebounds sharply

on Dec 6, 2013
Updated: Oct 21, 2019
Listen

_iNVEZZ.com: Friday, December 6th:_ The XAU/USD yesterday retraced from Wednesday’s gains to close at 1226.05, logging a 1.18 percent loss intraday.

Today, the pairing awaited the significant US data within the range 1233.85 to 1225.20 and right after the releases spot gold initially dropped to its lowest point since 5 July, at 1211.44, but then sharply recovered to an intraday high at 1244.65. There’s since been easing to the current 1233.98.
US employers continue to make new hirings at a steady pace and unemployment dropped measurably in November. Today’s labour market releases point to persistently stronger economic growth in the United States, and to a sooner-rather-than-later reduction in federal stimulus for the US economy.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

Non-farming sector employment increased by 203,000 in November from 200,000 in October, revised down from 204,000, and the unemployment rate fell by 0.3 percent to 7.0 percent last month, reaching its lowest level in the past five years.
Analysts were caught off guard both ways, expecting employment to rise by only 183,000, and unemployment to drop to only 7.2 percent.

As well, September and October non-farm employment were revised up by 8,000 in aggregate.
Today’s releases will likely reinforce the belief in the markets that the US Federal Reserve must soon reduce the pace of monetary support for the economy, currently running at $85 billion a month. The next meeting of the Fed’s FOMC is on 17-18 December.
Personal Spending was also reported today, showing a moderate rise of 0.3 percent in October, the partial federal government shutdown notwithstanding. Consumer spending accounts for some two thirds of the United States’ Gross Domestic Product.

Conversely, Personal Income shrank 0.1 percent in October, disappointing forecasts for an increase of
0.3 percent. The overall decline was mainly due to greater reductions in farm sector incomes, whereas private sector wages and salaries increased. Personal savings contracted 4.8 percent, against 5.2
percent in the previous month.
The Preliminary UoM Consumer Sentiment expanded to 82.5 this month, from 75.1 (revised up from 72.0) in the prior period and easily beating expectations for 76.2.

Commerzbank’s outlook for 2014 has the bank expecting gold and other precious metals to gradually regain their lustre next year. They pick gold to hit $1,300 an ounce during the year and to be at or near $1,400 by year-end.

In a commentary today, Commerzbank said: “The gold price is likely to recover from its historic slump this year and increase moderately in 2014. Investment demand should gradually revive. In conjunction with robust demand from Asia, this indicates upward movement in the gold price to $1,400 per troy ounce by the end of 2014.”
While it sees ongoing short-term downward risk in gold, the bank is picking the trend to reverse from the middle of 2014. It expects spot gold to be around $1,200 in Q1, then at $1,250 in Q2 and $1,300 in Q3. The key will be investment demand and “the most important question will therefore be when the negative trend amongst ETF investors will be reversed.”
Commerzbank’s reasoning is that “if strong demand from Asia can no longer be satisfied out of ETF holdings, as has been the case this year, the gold price is likely to rise”.
Fill out my Wufoo form!

Ad

Want easy-to-follow crypto, forex & stock trading signals? Make trading simple by copying our team of pro-traders. Consistent results. Sign-up today at Invezz Signals.

Learn more
Commodity Precious Metals