Gold prices, which had been having trouble breaking through the $1,245 mark this week, jumped well over the big $1,250 level this morning. Gold prices are building on the golden cross formed on Tuesday. An interesting note is that the SPDR Gold Trust ETF, which saw heavy inflows yesterday, formed its own golden cross the same day as spot gold.
An upbeat private sector payrolls report yesterday was mostly ignored by gold traders. April gold futures settled at a three-week high Wednesday, up nearly 1% to $1,241.80 an ounce Spot gold closed at $12,39.50 in New York yesterday, a gain of $7.80.
This morning, gold hit a session high of $1,257.90 an ounce before easing back slightly to $1.254. Updated technical numbers give support now at $1,247, then $1,243. New resistance is $1,254, then $1,259.
First-time jobless claims came in 6,000 applications higher than last week, for a total of 278,000. This had little effect on gold. The big price mover this morning has been the ISM non-manufacturing index, which dropped marginally overall. The big news as far as the markets were concerned was under the hood, where the employment index slipped into contraction for the first time in over two years. This reading signifies a higher level of layoffs than expected.
This sent gold sharply higher, on the backs of a swooning dollar and stock markets. These bullish outside factors had gold breaking the $1,250 level with ease.
Stocks, which closed just barely in the black yesterday, were already suffering this morning, under pressure from oil prices that were more than 1% lower. The reality that US crude inventories rose at triple the rate expected last week to post a new all-time high is dampening bullish sentiment spurred by news of shale production dropping.
Traders (except gold, apparently) will likely be on the defensive ahead of tomorrow's non-farm payrolls report. This is considered by many as the most important economic news of the month.
Gold prices are also being helped by Dallas Federal Reserve president Robert Kaplan. While noting the perils of continuing an excessively accommodating monetary policy, he noted "at this juncture, the Fed needs to show patience in decisions to remove accommodation." He sees less need for the Fed to raise rates, since the global economic slowdown is already tightening global financial conditions.
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