The gold price tiptoed slightly higher yesterday as US private jobs and services sector data disappointed.
Nomura upwardly revised its gold price forecasts, following both UBS and RBC. The broker explained that last year’s rapid fall in price had brought forward the next cycle, ‘many of the variables that drive gold prices have already reset to an extent.’
US data takes over safe-haven demand
Safe haven demand for gold has calmed somewhat on the back of the defusing of the situation in Ukraine. The price is now more likely to be influenced by speculation ahead of tomorrow’s non-farm payroll release and further of concerns over the US’ economic recovery.
Yesterday the ADP national employment report and the ISM non-manufacturing report on business were released. Both came in on the weak side of market expectations.
The Fed’s Beige Book report showed the US economy continued to grow at a ‘modest to moderate’ pace, once again severe weather was blamed for the poor performance in many sectors in the economy. However this data release did not appear to have a significant effect on the markets.
It seems that the weather excuse is allowing the Fed to get away with quite a bit at present. Many analysts quoted yesterday, after the Beige Book release, stated that they expected to see an uptick in the economy once the weather improves. The release and comments following it, echoed those of the Janet Yellen which were made during her testimony in front of the Senate Committee on Banking, Housing and Urban Affairs, during which she said the FOMC should be ‘attentive’ to any shifts in the economy, following severe weather disruptions.
Despite the above, expectations are that the nonfarm payroll data, this Friday, will show some modest growth. Estimates for new-job creation in February stand at around 143,000-150,000. Yesterday’s ADP report suggested just 139,000 were created in February, however fewer analysts are looking at this given the ADP’s poor forecasting performance of late.
Should NFP come in lower than expected then gold will find some support, however given the resistance at $1,340/oz, this support may be limited.
Central bank meetings
Later today both the ECB and the Bank of England’s monetary policy committees will meet to set interest rates. There is expected to be little change from either. Data released from the Eurozone yesterday showed a modest uptick in some areas of the economy, for the beginning of the year.
The PGMs continue to sparkle
Palladium continues to benefit from the Ukraine situation, soaring to an 11-month high due to worries that economic sanctions on Russia will see a fall in exports, and further restrict an already tight supply of the industrial precious metal.
Platinum rose to its highest price since September as talks collapsed in South Africa between the world’s top platinum mines and AMCU.
Speaking of the PGMs, the US Mint will begin selling American Eagle platinum bullion coins on Monday 10th, following a four-year hiatus. The move comes after investors and dealers have developed a renewed interest. Having notified interested parties earlier in the week, the US Mint has already sold 1,000 coins, ‘without even trying’.
Turkey’s gold imports fall
Turkey’s February gold imports fell by 93% from 6 tons in January to just 1.27 tons. The fall comes as gold prices rise and Iran-sourced demand drops. The decrease suggests that this year’s figures for Turkey’s gold imports will not be as impressive as last year when there was a 150% climb from the previous year.