GOLD PRICES jumped in London trade Friday, erasing the last 3 weeks of losses to new 6-year lows even as new data showed the US trade deficit widening last month to its worst November since 2008.
Separate US jobs data confirmed Wednesday’s private-sector ADP Payrolls report, showing a strong rise in net hiring for November just ahead of analyst forecasts.
Rising 3.7% from this week’s new 6-year low at $1046.50, the price of wholesale gold investment bars hit $1085 per ounce, just above mid-November’s weekly close.
Gold also rose priced in Euros, reversing most of this week’s 3% drop – but still heading for its lowest Friday finish since mid-September – after plunging amid yesterday’s shock surge in the single currency on the FX market in the face of extra QE bond-buying and negative interest rates announced by the European Central Bank.
“In principle, the expansionary monetary policy followed by many central banks should lend support to the gold price,” says a commodities note from Commerzbank in Germany.
“[But] market participants will now be waiting with bated breath to see what the US Federal Reserve will do in ten days’ time.”
The US is now “close” to full employment – one half of the central bank’s mandate – said Fed chair Janet Yellen to Congress in her regular testimony Thursday.
On the other half, “Longer-term inflation expectations remain reasonably well anchored,” Yellen said, “bolster[ing] my confidence in a return of inflation to 2%.”
Thursday’s ECB announcment, in contrast, “wrong-footed” traders, says US brokerage INTL FCStone, sparking “frenzied trade” – although “the precious metals complex had it relatively easier than some of the hotter markets like currencies and oil.”
The rise in Dollar gold prices “show[ed] as a Harami,” said Canadian-owned bullion bank Scotia Mocatta’s technical analysis overnight, “which in Japanese Candlesticks translates to ‘pregnant’…basically an inside day at the end of a very bearish down move.”
After Wednesday’s close to US gold futures trading “achieved a fresh cycle low at $1051,” says Scotia, “the technical picture is a Reversal warning. A higher close [Friday] will bring in fresh buying of gold.”
Across other investment markets Friday, the price of short-term US Treasury debt fell further but 10-year bonds rallied, edging yields down from Thursday’s sudden 3-week high above 2.30%.
Crude oil meantime fell hard, with US contracts dropping near 12-year lows beneath $40 per barrel, on news that the Opec oil cartel, meeting in Vienna, was unlikely to propose or agree a cut to output quotas.
New York equity markets rose sharply after the new US jobs data, but European stock markets held their earlier 0.8% losses for the day, pulling France’s Cac40 index down to its lowest level since mid-October.
Silver tracked the surge in gold prices, rising some 2.7% against the US Dollar to hit $14.55 per ounce, almost its highest level in 4 weeks.