FM:Gold price around 3-mth highs, US jitters weigh on dollar
The gold price broke out of the $1,270s on Tuesday morning, peaking at $1,287.70, its highest since mid-November.
The spot gold price was last at $1,282.75/1,283.55 per ounce, still up $9.15 on Monday’s close.
The market rallied yesterday on its improved technical picture, while its status as a safe-haven asset attracted investors back to the market.
Additionally, a softer dollar is providing support – the euro hit its strongest against the US currency in two weeks at 1.3683 ahead of new Federal Reserve chair Janet Yellen’s first testimony to Congress on Tuesday and the Senate on Thursday.
Recent soft economic data – last week’s US jobs report showed that only 113,000 new jobs were created outside the farming sector in January, much lower than the forecast 185,000, although the unemployment rate edged down to 6.6 percent from 6.7 percent – could persuade the Fed to pause the tapering of its quantitate easing programme.
“In fact, hints by Yellen to this effect could trigger a sharp rally in both gold and US equities, breaking the recent inverse relationship between the two,” INTL FCStone analyst Edward Meir said in a note.
“Since gold is already bumping along the top side of its range, a breakout to the upside could be followed through with additional momentum-based buying,” he added.
Gold has gained more than six percent since the start of the year – falling equities have sent investors scurrying for safe havens and lower bullion prices have attracted more physical demand.
US and Japanese shares fell multi-month lows after the release of forecast-missing economic data, while capital flight from emerging markets (EMs) – fallout from the decision to start unwinding QE – has also weighed.
“While the fundamental situation has brightened, the technical picture has also improved, which could spark follow-up buying that in the short term would probably drive the gold price even further up,” Commerzbank said
Data releases today are thin on the ground – only US wholesale inventory numbers are of any note.
In the other precious metals, the silver price at $20.11/20.16 per ounce was up marginally, platinum was $3 higher at $1,386/1,396 and palladium gained $5 to $719/724.
In South Africa, talks between platinum miners, the striking AMCU union and the state mediator have been postponed until Thursday.
“According to the union, the mediator has allegedly proposed to producers that wages of mining workers should be doubled within three years, a suggestion that the companies reject,” Commerzbank said.
