The rangebound action in gold looks set to continue this week after a couple of failed attempts at getting back over $1700 the gold price has drifted back lower to the bottom of its short-term range around $1655. We can see that after the x-mas low around £1012 gold has moved higher by about 4%. So for now we’ve got a rangebound price of gold and no obvious catalyst to make it break lower or higher. We do get the US Q4 GDP numbers this wednesday which might get some movement going in the gold markets, but realistically any real catalyst is going to come from the outcome of the spending cuts sequestration and debt ceiling raise at the end of February in the States. We can see that from the end of summer 2012 the borrowing costs in the UK have drifted higher going from 1.45 to 2.10. We’re now back to levels last seen last spring. The UK government can ill afford rising borrowing costs and should we see a break above 2.14 in the 10 year it would likely prompt the BoE to reach for those money printing levers sooner rather than later in an attempt to keep the borrowing costs down.

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