Gold is surprising traders this morning in New York by holding steady in the face of a surging dollar, as disappointing news from Europe show the Eurozone recession continuing, and Japanese GDP fell for the third straight month.
Euro GDP fell .6% for the fourth quarter, the largest drop in nearly four years. The European Central Bank lowered its 2013 economic forecast to zero growth, down from a previously expected .3%. This caused the euro to tank, which in turn boosted the dollar. The bad news also caused Wall St. to open lower this morning.
Gold is showing resiliency against the headwinds of a booming dollar and reduced physical buying in Asia (the Chinese markets being closed all week for Lunar New Year.) It may have been assisted a bit by some safe haven demand in Europe overnight in reaction to the bad economic news. Yet another headwind gold is resisting today is slightly lower prices in oil, as the black gold trades near a three day low after recent highs.
First-time jobless claims dropped by 27,000 last week, with 341,000 people applying for unemployment for the first time. MarketWatch opines that part of this drop may have been due to super snowstorm Nemo, as some unemployment offices in the Northeast were closed last week, and people were advised not to travel.
Gold is continuing to trade in the same very narrow band in New York that is has all week. Most traders seem to be on the sidelines, awaiting the results of the G-20 meeting in Moscow, where one of the main subjects will be about currency wars. Japan is being made the bad guy in the latest round, but no one seems to be brave enough to confront China over its long-standing policy of manipulating the renminbi.