Until Wednesday last week, gold was trading in positive territory continuing the rally from the previous session.
The spot gold price was quoted at $1,164.85/1,165.15 per oz, up $8.05 on the previous close.
There were many supporting factors for gold’s rally-
- Mainly all the uncertainty that lies ahead with the changeover in the US administration
- The weakening trend in the yuan.
On Friday last week, gold slipped following the release of strong US employment data which was as follows-
- The USA added 156,000 jobs in December, compared with 204,000 in November, while wages grew 2.9% year-on-year to reach a seven-year high.
- German industrial production climbed 0.4%, which was down from the 0.7% expected, while the country’s trade balance climbed more than expected.
- The non-farm employment change for December showed 156,000 Americans entered the workforce, a slight miss from the 175,000 forecast.
- However, the figure for the previous month was revised up 19,000 jobs and the headline unemployment figure came in as expected at 4.7%.
- The big surprise was that average hourly earnings grew by 0.4% month-on-month, bringing total wage growth to 2.9% for the year and the highest level since before the recession.
Gold prices were in positive territory in London on the morning of Monday January 9, recovering slightly from last week’s drop.
The spot gold price was recently quoted at $1,176.20/1,176.50 per oz, up $3.40 on the previous close. Trade has ranged from $1,172.50 to $1,178.75. Gold prices edged up in a technical rebound on Monday after one-month highs hit last week were undercut by the prospects of more interest rate hikes from the US Federal Reserve.
US employment increased less than expected in December but a rebound in wages pointed to sustained labour market momentum that sets up the economy for stronger growth and the prospect of further interest rate increases this year.
Chicago Federal Reserve President Charles Evans said on Friday the central bank could raise interest rates three times this year, faster than he had expected just a few months ago.
Evans and other regional Fed presidents are scheduled to speak this week, and the outlook for U.S. rates may become even clearer when Chair Janet Yellen appears at a webcast town hall meeting with educators on Thursday.
Expectations of US interest rate hikes lowers demand for the non-interest-paying bullion.
Apart from a rate hike the most discussed r rather the most awaited topic currently is the fiscal stimulus that Trump is promising and, of course, inflation.
Despite the rebound in the dollar, gold prices are holding up well – all thanks to the safe haven move by investors, just ahead of the shift in US administration.
By the end of 2016 or rather post the 2016 US election, confidence in the global markets was running high thus propelling gold to lose its safe-haven appeal. But 2017 has lot of uncertainties and surprises to unfold for gold which will once again get into the investors basket keeping in the mind its appeal as a safe haven asset in times of global uncertainties.
In the week ahead, investors will be looking ahead to US economic reports, particularly Friday’s retail sales figures for December. Investors will also be watching an appearance by Fed Chair Janet Yellen on Thursday and speeches by a handful of other Fed officials during the week, as well as President-elect Donald Trump on Wednesday for a press conference.
Now investors await the upcoming inauguration of President-elect Donald Trump to see what the volatile leader will implement once in office.