Gold Firmer on Corrective Bounce; Trading Choppy This Week
Gold prices are moderately higher in early U.S. trading Wednesday.
Read moreADP Shows 213K Private Sector Jobs Created In January
(Kitco News) – U.S. companies slowed the pace of hiring in December, according to a report released by payrolls processor ADP Wednesday.
Greek Finance Minister’s Comments Seen As “All-Clear”
In its Tuesday report, Mitsubishi says that recent comments made by Greek Finance Minister, Yanis Varoufakis, regarding the country needing a “bridge agreement” on its debt situation is interpreted to be, “the financial all-clear for which the markets were so desperately waiting.” “The euro bounced, world stock indices rallied, and the bids disappeared from the gold market,” explains John Howlett of Mitsubishi International Corporation. “The already overloaded on the long side gold market couldn’t handle all this temporary euphoria, but the white metals, copper, and oil all got a decent jolt,” he writes. Howlett explains that whether or not this happy deviation from the “lugubrious script” can be sustained will be better known when January’s Purchasing Managers Index (PMI) numbers from both China and Japan are released. “The spending habit of over a billion Chinese citizens trumps the possible fiscal responsibility of 11 million Greeks,” he says. “Technically for gold there is the confluence of the 200-day moving average (around 1252.50) and the round 1250 number that has to hold to keep the bulls from all-out panicking,” Howlett explains. Greece’s Finance Minister is set to meet European Central Bank President Mario Draghi on Wednesday.
Gold Sells Off Amid Increased Investor Risk Appetite
Gold prices ended the U.S. day session moderately lower Tuesday, but up from the daily lows. Better trader and investor risk appetite Tuesday that boosted the world stock markets was a negative for safe-haven gold. However, fully bullish “outside markets”—sharply higher crude oil and a sharply lower U.S. dollar index—did help to lift gold prices up from their daily lows. April Comex gold was last down $12.90 at $1,264.10 an ounce. March Comex silver last traded up $0.144 at $17.395 an ounce.
Gold To Perform Well In February Despite Current Selloff – INTL FCStone
Despite recent downside pressure in gold prices, Edward Weir of INTL FCStone says he expects the metal to do well this month. “Although struggling so far in February, we think gold will do better as well in February, since we do not think that the heightened volatility in equities is over just yet,” he says. Weir notes several factors contributed to gold’s strength in January, including the unprecedented move by the Swiss National Bank as well as uncertainty stemming from Europe, and although they have seemed to calmed down, he is positive on his outlook for gold. “[We] expect to see a $1225-$1310 trading range prevailing,” he says. “Longer-term, the most recent Reuters poll has gold averaging $1234 in 2015 and $1278 in 2016, levels that might prove too low if central banks start to second-guess themselves again,” he adds. Weir says that although silver prices can benefit from gold’s strength, he expects the yellow metal to outperform silver.
Randgold’s Loulo-Gounkoto Complex Could Still Grow – Bristow
Randgold Resources (NASDAQ:GOLD)(LSE:RRS) is looking at developing a third underground mine at its Malian-based Loulo-Gounkoto gold mining complex. “Regardless of the potential Gounkoto underground mine, subject to the gold price remaining at current levels, the complex is forecast to up its profitability from its existing mining activities through increased production and reduced unit costs on the back of higher grades, improved recoveries and the benefits of its ongoing capital projects,” says Mark Bristow, chief executive officer of Randgold. He adds that the complex has 8 million ounces of gold in reserves. He also continued to give his support to investing and developing Mali as a country. “Now, more than ever before, Mali needs investment and private sector support as it contends with the Islamist incursion in the north, the abiding threat of an Ebola recurrence and the challenge of rebuilding the economy after the period of civil unrest some years ago,” Bristow says. “If we continue to work in partnership with each other, these obstacles too can be overcome.”
Fed Could Surprise Markets With Premature Rate Hike In 2015 – Blackstone
Many ‘surprises’ are in store for 2015, some of which, according to one investment banker, could be a premature U.S. Federal Reserve rate hike, and an unsuccessful easing program in Europe.
Gold Weaker Amid Lack Of Fresh Bullish News
Gold prices are again modestly lower in early U.S. trading Tuesday.
Read moreECB Easing Won’t Have Much Impact On Gold: BoAML
Bank of America Merrill Lynch (BoAML) says the European Central Bank’s (ECB) decision to move aggressively in government bond purchases won’t likely impact gold. During its Jan. 22 meeting, the ECB signaled to the market that it will be fighting against growing deflationary risks. “While we acknowledge that gold has featured more highly on investors’ radar screen as of late, there has been some apprehension over the impact the recent ECB easing may have on gold quotations,” BoAML says in its research note Monday. “An increase in central bank action is often seen as bullish by gold market participants. Yet, we believe the impact of a more pro-active ECB on gold is somewhat ambiguous this time around for several reasons. Most notably perhaps, there is limited risk that peripheral spreads will blow out again (rising spreads were very bullish for gold at the height of the Eurozone crisis), while USD may be pushed higher further.”
