Gold Shrugs Off Dollar-Bullish US Jobs Data, Eurozone Uncertainty

Source:

"Euro-priced gold meantime extended yesterday's surge, hitting a new 16-month high above €1,029 per ounce after news that Eurozone inflation fell to minus 0.2% across the 19-nation union in December, pulled down by falling oil prices."

Gold dollars

Gold in dollars recovered a brief dip below $1,210 per ounce after stronger-than-forecast US jobs data Wednesday, standing 2.0% higher for the week so far as world stock markets rallied from recent falls.

U.S. stock markets opened 0.8% higher and France's Cac40 gained 1.2% for the day despite the murder of 12 people at satirical weekly Charlie Hebdo in Paris by gunmen apparently claiming vengeance for the prophet Mohammed over recent cartoons.

Ahead of Friday's official estimate from the US Bureau of Labor Studies, private-sector data from payrolls provider ADP today put December's U.S. jobs growth at 241,000—the strongest net addition since July's 30-month high.

Trading at $1,212 per ounce, the Dollar gold price held $10 below Tuesday's new 3-week highs after separate data put the US trade deficit at an 11-month low for November, smaller than analysts forecast.

Euro-priced gold meantime extended yesterday's surge, hitting a new 16-month high above €1,029 per ounce after news that Eurozone inflation fell to minus 0.2% across the 19-nation union in December, pulled down by falling oil prices.

Brent crude today joined U.S. oil below $50 per barrel for the first time in 5.5 years before rallying 2.5%.

Unemployment amongst the Eurozone's 330 million citizens held flat at 11.5% in November, according to Eurostat.

But on national data, Germany's jobless rate fell to new record lows last month, whilst reaching fresh highs in Italy.

German newspaper Bild says Berlin is making "contingency plans" for possible bank runs in the event Greece leaves the currency union after this month's snap elections, led by anti-austerity party Syriza.

Greek 10-year bond yields rose Wednesday above 10% for the first time since mid-2013.

"To add fuel to the fire," says one commodities trading desk, "central banks are reducing reserves held in Euros," noting a Bloomberg report estimating global Euro holdings fell 8.1% in Q3 2014, outpacing the Euros 7.8% decline vs. the Dollar over that time.

"Outside the U.S.," says a 2015 outlook from Australian bank Macquarie, "uncertainty is the name of the game. But in general 'events' look at least as likely to be bullish for gold as bearish."

But "we expect gold to return to its downward trajectory," says a new 2015 forecast from London market makers Barclays' precious metals analyst Suki Cooper.

"In fact," says Cooper—forecasting a drop to average prices of $1,150 per ounce next summer—"at prices above $1,200 we think gold presents a selling opportunity. The underlying trends do not look supportive."

Adrian Ash
Bullion Valut

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