Gold Due For A Turnaround?

Last week, gold finished Friday posting small gain for not only the day but the week as well. Many bears saw the jobs data on Friday as a clear sign that the show was over for gold. For a few moments they thought they were right when the yellow metal dropped to a two-week low. However it quickly bounced back to finish the week higher, even if it was just by 20 cents.

As we told MarketWatch, “The small drop and quick recovery we saw in gold was a clear sign that gold has been oversold and has no more time for the bears…The downturn in gold has no more to give.”

Are we about to see a turn-around in gold? Who knows. To say that is to beg the market to prove you wrong. I expect it to happen, but whether Friday was the start of it, I’m not so sure.

For instance, the unemployment rate fell from 7.9% to 7.7% on Friday. There will still be a large majority of investors who believe the US economy is beginning to see signs of a recovery. It might be a little longer until the stars realign to show what’s really going on in the economy.

In the meantime, hawks seem to be getting louder at the FOMC. Bernanke does remain insistent however that QE3 will continue on through 2013.

Demand for jewellery, as well as gold investment, remains strong in Asia – particularly India where prices have reached levels not seen since October.

Silver also had a good week last week, finishing 0.5% higher. We told Marketwatch:

“Silver will be following gold’s performance but also benefitting from news of China’s better-than-expected trade data and industrial consumption…we see it being bought as both an industrial and precious metal. There is also, of course, the element that you’re more likely to be able to afford silver over gold, and hence we see more safe-haven heading that way at the moment.”

This week is generally quiet week for data releases.

Worries over whether or not the UK has hit a triple-dip recession will either be put to bed or confirmed on Tuesday, as the UK’s industrial production numbers are released. Whilst PMI figures for January and February show that the economy grew, it was by a meagre 0.1%, not exactly a recovery.

Earlier today we saw that Germany’s crisis-proof vest isn’t so bullet-proof. The trade balance was down from the last reading. In France industrial production was also down for the month, significantly lower than had been expected.

This morning key machinery order and money supply data was released from Japan. Orders are down by over 21%, suggesting that all that money printing hasn’t made a huge impact so far.

On Friday a consumer confidence report is likely to show that US GDP will be on course to boost GDP, following the stagnated GDP in Q4 last year.

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