Yesterday (21/1), gold inched up as the disappointing US unemployment claims fell unexpectedly, simutaneously, ECB signaled more policy easing which lifted the dollar against the euro. The gold moved in a broad range between $1,104.41 – $1, 092.2.7/oz, before setting at $1,100.98/oz, up just a little bit, compared with the opening price $1,100.83/oz.
The “tug of war” between the selling and buying position occured on yesterday’session, with stronger force from the buying one.
The increased gold demand derived from the downbeat data of the unemployment claims and the negative Philly Fed manufacturing index.
The number of Americans filing for unemployment benefits rose to a six-month high last week, suggesting some loss of momentum in the labor market amid a sharp economic slowdown and major stock market selloff. The Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 293,000 for the week ended January 16, the highest reading since early July, according to the Labor Department .The rise in the jobless claims has spured the labor market worries and in turn boosted the safe-haven appeal of gold.
Another report on Thursday (21/1) showed that factory activity in the mid-Atlantic region improved in January as shipments rebounded, but still contracted for a fifth straight month. The new orders index remained negative, but increased 10 points to -1.4, its first positive figure in four months.
Slowing global growth and a strong dollar will continue to weigh on the manufacturing sector while the production territory and the relentless spending cuts on energy sectors will put a strain on the US economy outlook. The market is certain that the Federal Reserve is unlikely to raise interest rate for the next time during the FOMC January meeting. The global economic outlook dims and the Fed hike rate delay will brace the demand for gold, then push the yellow metals go up.
Nevertheless, there is a moderate rise in the price as the selling pressure on gold is also high during the European Central Bank president’s speech on further quantitive easing in the next two months. Stocks on the Wall Street were trading higher on the ECB President Mario Draghi’s comments that the ECB could “review and possibly reconsider” its monetary policy when it meets in March. Oil and equities all rebounded, dollar soared as well after ECB president indicated further easing measures could be forthcoming. The central bank’s move can be put
Besides, the slow physical demand from the major consumers such as China and India still kept a lid on the gold price gains. The decreased demand in China while the gold price for the whole week has gained, which declines the gold purchase before the upcoming Lunar New Year.
Analyses of Group Fiinvesting