The Daily Nugget -- Gold Above $1,790

As expected the European Central Bank decided Thursday to keep rates at 0.75%. Draghi told journalists that while the ECB has not yet initiated its OMT plan (no country has yet met the conditions) the idea of it alone had been enough to reassure markets. Something drastic needs to happen, though, as apparently Draghi is ‘bored’ by these complex OMT discussions with journalists -- his microphone was left on after he had finished answering the Press’ questions.

$1,800 Flirt
The preparedness of the ECB triggered a rally in the Euro, which prompted gold to head for $1,800. It didn’t quite reach it but the spot gold price rose above $1,790. This morning it has risen for its fifth consecutive day and has risen to as high as $1,796.10.

Silver futures for December delivery are having a good day so far, rising above $35/oz by 0.14% to trade at 35.052.

Divisions are being seen in Spain, not only on a private level where divorce is at its highest and marriage at its lowest, but also between the technocrats. Rajoy has been attacked by the governor of Spain’s central bank over his fiscal plan.

England's Mess
The Bank of England also proved the Daily Nugget right by not changing interest rates, or announcing another round of QE. Speculation is still rife, however, as to whether this will still be the case come November’s meeting. House prices have fallen 11% in Britain since the financial crisis, M&A activity has fallen 30% and the M4 measure of money supply was lower than expected.

The Bank of Japan, as analysts expected, maintained rates at near-zero levels as well as its asset-purchase programme. Some, however, are turning their attention to the next meeting on October 30 when two consecutive periods of economic contraction will have been seen, increasing the chances for further easing.

FOMC minutes for the September meeting were released yesterday and showed there was some unease with the huge asset-buying program it embarked on last month, it can’t have damaged their consciences too badly though as they still went and signed off ‘QE to infinity’.

Food Prices Up
Regardless of central bank announcements in the Western world, we are beginning to see evidence of the financial crisis hitting the little people, boosting the fundamental reasons for buying gold as an insurance; the most obvious statistic that impacts us all, whether central banker or bin man, is food prices. According to data from the Food and Agricultural Organisation, food prices were up 1.4% in September compared to August’s prices.

Cato Institute economist Steve Hanke, has gained some attention after warning that the Iran vs. the Western World’s sanctions has led to hyperinflation. The rial’s dramatic devaluation, the monthly inflation rate is now above 50%, is something we wrote about yesterday with a focus on how it is affecting gold bullion investment.

Analysts have been looking toward the end of the week waiting for U.S. nonfarm payroll data, with many expecting to see it push gold above $1,800/oz. Last month the Fed announced it would buy mortgage-backed securities until the labour market improved. If data is seen to improve this could temper gold’s climb as some may argue that it is evidence the Fed’s policies are working and therefore the inflationary measures may not carry on for as long as expected.

Geo-political tensions, most recently between, Turkey and Syria, are also likely to help gold prices as well as volatility in the oil price.

The next hopeful push for gold will come from China as many are expecting to see further plans for easing plans to be announced, following in the ECB, US Federal Reserve, BOE and BOJ’s footsteps. After disappointing PMI data this month, many are now of the opinion that China has nowhere else to turn other than to the printing presses.

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