The Daily Nugget On Gold

German Chancellor Angela Merkel returned from her Austrian break yesterday and the markets didn’t exactly give her a warm welcome; European shares had their worst day in over a week and further evidence that the Greek economy is effectively in a depression was published.

Data showed yesterday that Greece has effectively been contracting non-stop since 2009, which is expected to continue into next year.

Today, however, European stocks rose once again, as did the Euro, with the release of better-than-expected German and French GDP. There had been some concern after yesterday’s weak data from Japan that the markets would receive further bad news from Europe but that was not the case.

This does not mean all is rosy however, as it's only QoQ data that came in better than expected. Indeed, YoY GDP data is down 1.2% in Germany. Meanwhile both CPI and RPI in the UK are ‘better’ than expected with both seeing small increases.

Gold Yields To Profiteers
Yesterday, gold was down on further concern and doubt over central-bank stimulus. Japan showed minimal growth, adding to concerns after China’s data releases last week that the global recovery is much weaker than expected. Given gold’s climb last week, it seemed investors were looking to make a profit yesterday.

While it seems gold bullion investors remain cautious -- the precious metal remains in a narrow trading range and only 3% above YoY -- the majority of analysts agree that further QE is on the horizon, particularly in the U.S. and most likely before the November elections.

Next Stop, Wyoming
Gold is up slightly this morning on the back of new euro-zone data, with U.S. data still to be released. However analysts expect the yellow metal to remain in its current trading range of $1,600-$1,630/oz while investors wait for central-bank action. While an announcement from the ECB could come at any time, which will, no doubt, impact the price of gold, it is certain that the next major event to look out for in regard to gold investment is the August 31 Annual Meeting of economists and central bankers in Jackson Hole, Wyoming.

Over the next few weeks all eyes will be on the euro zone rescue plan as Bernanke is not due to make any further announcements or speeches for three weeks. Merkel is under the microscope as Germany is expected to flex its muscles over Greece’s bailout; unless the battered economy meets further bailout terms, the chancellor can withhold further aid payments.