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04.12.2014 16:20

Gold: A review of the market situation

Gold prices retreated from a session low, thus returning to the levels of the opening, which was associated with the recovery of the euro against the dollar after the statements of the ECB.

After the ECB's decision to keep rates at previous levels Draghi said that the ECB is ready to take additional measures, if necessary, but did not make any specific announcements. He also added that the ECB lowered its forecasts for inflation and the economy. Bank revised GDP forecast for 2015 and 2016 to 1.0% and 1.5% against the September estimates 1.6% and 1.9%, respectively. With regard to inflation, experts believe that in 2015 HICP index will rise by 0.7% and in 2016 - 1.3%.

The head of the ECB said that the central bank will be particularly vigilant, tracking the dynamics of oil prices. Draghi noted that structural reforms in the euro area can stimulate the economy, and the pace of reforms on the labor market needs to be accelerated. Meanwhile, he added that in the coming months has already launched measures will make the current rate even more accommodative, support the policy of transparency with regard to the main interest rates and once again confirm the fact that there is a significant difference between the monetary policy of the largest developed economies.

Had little effect as today's data on the US labor market. As it became known, initial applications for unemployment benefits fell by 17,000 and amounted to a seasonally adjusted 297,000 in the week ended November 29th. The result coincided with the expectations of economists. Data on applications for unemployment benefits are unstable and tend to fluctuate from week to week. Moving average for four weeks, which smooths the data increased by 4750 to 299 000. The report also showed that the number of people who continued to receive unemployment benefits rose by 39,000 to 2.36 million in the week ended Nov. 22.

Investors are also expected to release a report on non-farm payrolls to obtain additional evidence of strength recovery in the labor market. Economists forecast that employers added 225,000 new jobs, and the unemployment rate will be 5.8%. Strong employment data are likely to increase speculation about when the Fed will raise interest rates, while the weak performance could support gold, undermining the basis for an early rate hike. Recall expectations of growth rates on loans put pressure on gold as a precious metal with difficulty competing with the yield on interest bearing assets at higher rates.

It is worth emphasizing that many traders explain the recent rise in gold prices including cover short positions and are not sure of continued growth. "Much of the shopping recently been associated with the liquidation of short positions, rather than opening or extension of long," - says the report HSBC.

Cost of January futures for gold on the COMEX today rose by $ 1.1 to 1209.60 dollars per ounce.

Market Focus

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  • Earnings Season in U.S.: Major Reports of the Week
  • U.S. commercial crude oil inventories decreased by 4.7 million barrels from the previous week
  • Australian unemployment rate stable at 5.6% in June
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