Daily Nugget: Stand By For Payrolls Data

After its biggest quarterly fall on record was completed on Friday, the price of gold has started July with a bang and is holding steady at $1,240 this morning. This is in part thanks to weak China data and Friday’s comments from San Francisco Federal Reserve President John Williams. Mr. Williams said that he no longer felt the Fed should wind back stimulus given the low inflation in the US economy having previously said that tapering should begin this summer.

The silver price is expected to find support at $18.19/oz. Silver futures are trading higher this morning, moving away from the three-year low seen late last week.

Gold has now fallen 27% since the start of 2013, its worst first-half performance since 1981. ETF outflows continue and SPDR outflows total nearly 13 million ounces this year. The flow of gold from West to East continues. High ETF outflows is one of the reasons given by Barclays this morning who have cut their gold price forecast.

This morning factory activity data for China has come in at a 9-month low. This hasn’t dampened demand however for gold investment, data from the SGE shows another week of high gold deliveries in the penultimate week of June.

Coin demand, which reached record highs in the April and May, slowed down last month. Sales of US American Eagles in June were at levels not seen since August 2012 at 57,000 ounces.

Economic data and gold

This week has some big economic data releases which may affect the price of gold.

The much revered Abenomics will come under scrutiny as data on industrial production, retail sales and inflation are due. Each are expected to perform strongly except for inflation as prices continue to fall. GDP growth for Q2 is expected to be strong.

Germany’s IFO survey of business conditions is the next data set, following improved flash PMI data from the Eurozone region, and is expected to show further signs of regained strength in the country.

This morning Mark Carney has started his new job as Governor of the Bank of England, and the first foreigner to take on the role. He is expected to give further guidance on long-term interest rates and provide more transparency to outsiders regarding decisions made within the Banks walls.

Carney’s first big day in the spotlight will be on Thursday at his first MPC meeting. Rates are not expected to be changed, but instead the Committee is expected to wait until the beginning of August for any big changes.

All eyes will once again be turned to the US economy as it’s time once again for the non-farm payrolls data on Friday, a key indicator for those looking to roll back stimulus at the end of the summer.