Last week again, gold reacted to various factors like US jobless claims report, SPDR Gold Trust, Canada Employment report and ECB Interest rates.
News released in the market that European Central Bank was prepared to buy bonds to help the nations facing economic turmoil which led to a rise in gold prices with gold reaching almost an 11 month high of $1796.5 on Thursday.
Investors have been closely eyeing the result of Bank of Japan’s policy meeting which is expected to keep things unchanged for Japan
Another important data for gold market is the US jobless claims report. The report showed an al together different picture of the US economy. Unemployment rate unexpectedly fell to 7.8% in September, down from 8.1%, as a survey of U.S. households showed 873,000 more Americans had jobs compared to a month earlier. January 2009 has witnessed such low unemployment rates.
A bettering economy showed signed of development. Good economic news is good political news which also adds up to good financial news. Hope this reports make the picture brighter for precious metals.
In Canada, the jobs data was mixed with the unemployment rate rising one-tenth of a point to 7.4 per cent in September even as the economy added 52,100 jobs: five times the number expected.
The Federal Reserve said last month it will purchase USD40 billion of mortgage-backed securities every month until the labor market improves. The labor market has to improve for QE3 or else the FED might have to introduce other stimulus measures.
The labor unrest in South Africa has spread to more mines run by the world’s top platinum producer Anglo American Platinum in a wave of wildcat strike action that has hit the country’s mining sector.
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings hit a record high of 1333.44 tonnes by Oct. 4.
Vagueness over Spain’s request for a full scale bail out has also affected the markets. Analysts and market players predict the Spain might go in for a full scale sovereign bail out but Spain’s Prime Minister – Mariano Rajoy denied the same
A bailout would allow the ECB to step in and buy Spanish sovereign debt, which would result in reduced borrowing costs for the debt-strapped nation. But Spain has been reluctant to do so because it may come with conditions on its budget.
Moreover, gold prices are expected to rise further given the tensions prevailing on the Syria - Turkey border.
With an overvalued currency, tightened credit conditions and the prospect of higher interest rates, the economy could be vulnerable to a further slowdown from the under two per cent pace recorded so far this year
Meanwhile, in India, Stockists have been buying gold heavily given the rise in demand with the onset of the festive season. And a recent dip in rupee has led to re stocking of inventory by these stockists as they expect a rise in gold prices before Diwali and the beginning of the marriage season
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