GOLD PRICES held firm against a rallying US Dollar in London on Wednesday, trading above $1230 per ounce as Western stock markets failed to extend a strong surge in Asian equities overnight.
After new data Tuesday said US manufacturing recovered a little in February from its worst showing since 2009, private-sector payroll figures from ADP Inc. reported a jump of 214,000 – well ahead of economists’ consensus forecasts.
The US government’s estimate of non-farm payrolls growth in February will be released Friday.
Commodities paused after the recent 30% jump from 13-year lows in crude oil, and silver prices also held flat
below $14.90 per ounce, while major government bond prices retreated, nudging 10-year US Treasury yields near 1-month highs at 1.85%.
“If the world economy and financial system is indeed heading for the rocks,” reckons London-based Capital Economics, “an extended period of looser monetary policy and strong demand for safe havens should boost the precious metal further.”
“However, we suspect that a new factor – the return of inflation – will also be increasingly important [and] any correction in the gold price will be short-lived,” the consultancy concludes, repeating its end-2016 forecast of $1250 per ounce.
Wholesale bullion trading “could continue to see some profit-taking and the market slip back,” says a note from brokers Marex Spectron in London.
But “consolidation remains underway,” counters a technical analysis of price charts from Canadian bank and London bullion market maker Scotiabank.
Consolidation should be seen “in a positive light,” agrees the latest Bullion Weekly Technicals from German financial services group Commerzbank, repeating that February “saw the market break through the 2014-2016 downtrend at $1200…
“[Now] we are seeing the market hold sideways below $1263.50” – the early February high for Comex gold futures contracts.
“The proposed excise duty will lead to a drastic fall in business,” says Surinder Kumar Jain, vice-president of the All India Sarafa Association, which had previously supported
the BJP government’s policy of trying to curb gold imports by offering deposit and bond schemes – schemes further favored with the exemption of capital gains tax in Monday’s Budget.
“Scrap imports from Asia [to Italy and Swiss refiners] have boomed,” says the latest gold note from precious-metals analysts Metals Focus, reporting that 2015’s decline on falling prices has “all changed”.
“Domestic volumes responded strongly to prices breaching €36 per gram” in late February say refining industry contacts, Metals Focus reports, pointing to €1120 per ounce – a price last seen by European scrap dealers and refiners in April last year when gold failed to recover its sudden spike of last New Year 2015.