Spot gold flirted with breaking $1600 in yesterday’s trade as commodity wide liquidation was felt through-out. The metal held $1612 and traded to an intra-day high of $1634 in today’s trade.
Spot gold ticked higher on short covering as we enter a long weekend. The yellow metal pushed to $1634 as traders cut positions ahead of tomorrow’s key employment numbers. U.S data released this morning saw Initial jobless claims fell 6,000 last week to 357,000. This was the fewest new claims since April 2008 and was in line with expectations. This offers further evidence that the U.S. labor market continues to be on the mend. Investors are now squarely focused on Friday's monthly non-farm payrolls report. Upbeat results here would further dent expectations for the Federal Reserve to offer another round of monetary stimulus.
After taking a breather with their own struggles, the eurozone troubles have been brought to the forefront once again. Spain has struggled to attract interest at a government bond auction earlier this week. Since then, worries have risen about the country's finances and ability to grow. This could lead to Spain being dealt the same hand Greece was dealt with being forced to accept certain terms to gain a bail-out.
Physical demand was re-invigorated as Asian players returned to the market last night after their 3 day hiatus. Indian demand returned slightly as the price drop caught the eye of traders.
“Overnight, the rout was arrested somewhat by decent physical buying, especially from South East Asia. However, this only served to keep prices steady, with the downward trend resuming in this morning’s trade. Should the euro/dollar manage to remain steady, we don’t foresee another leg down today” said Standard bank in their daily note.
Expect the volatility to continue as gold has held; for now; in its range of $1600-$1700, a break on either side should and will determine the direction this metal will take. Ultimately the easy monetary policy set forth by the Fed is bullish for commodities on a whole. Crude oil held the $101 level and could look to rebound, which would also cause a strain on the gas prices. Although markets are closed for Good Friday the Non-farm payrolls will still be released.
Spot silver which took it on the chin the last couple of days has rebounded to trade higher to $31.84 as short covering was the order of the day.
