Gold gains ahead of the jobs report from the world’s largest economy
Gold surged today to extend the gains recorded in the past session, where the metal repeats the same scenario every day as it moves against the U.S dollar, as we can see moves taken by central banks yesterday started to weaken the dollar; during the U.S. session the U.S. dollar retreated easing the pressures forced on the shiny metal to close the session in New York with gains.
Gold opened the Asian session today at $1651.17 an ounce, and recorded a high of $1665.90 and a low of $1648.35, and is trading now around $1658.45 an ounce.
On the other hand, the U.S. dollar index opened the session at 78.58, and set the highest at 78.72 and the lowest at 78.41, and trades now around 78.49.
We can see an obvious relationship between gold and the U.S. dollar, where after gold set the all-time record on September 6 at $1920.86 per ounce, the dollar started to incline, where the currency rebounded to the upside from a low of 74.66 recorded on the same day to currently trade around 78.44, while the shiny metal started to ease reaching a low of $1532.30 and is currently hovering around $1656.45 an ounce.
Therefore, we recommend you dear reader to keep your eyes on the U.S. dollar alongside with the global equity indices, where optimism in equities could force the U.S. dollar to trade lower, resulting in stronger demand for gold.
Moreover, the economic conditions remain highly uncertain, while investors are waiting for the jobs report from the world's largest economy later today, which is the main focus in the session today, especially after the economy didn't add any new jobs in August.
Yesterday, and after the European Central Bank's Governing Council voted by majority to leave rates unchanged at 1.5%, Trichet announced in his last press conference as the president of the European Central Bank new unorthodox measures to support growth and maintain price stability in the monetary union, where the bank will offer 40 billion euros in terms of buying covered bonds and will also offer 12-month and 13-month loans for banks with full allotment and finally the President said that the Bank decided to extend regular money operations at least until July 2012.
Steps taken by the European Central Bank yesterday have followed the 75 billion pound increase in the quantity of asset purchasing program presented by the Bank of England, which started to move in order support the sluggish pace of growth and to revive the faltering recovery, especially after the European debt crisis have pressured growth in the second quarter, where the gross domestic product was revised lower to 0.1%, adding to pressures facing the kingdom such as high inflation levels and rising unemployment.
Trichet also said during the press conference that all governments must show determination and take decisive actions to implement measures to reduce deficits, while nations under bailouts should implement reforms in order to stimulate growth and recovery.
Gold could trade positively during the day, where investors could demand more gold as a hedge against uncertainty, awaiting the critical jobs report from the U.S, especially after unemployment remained above 9% in the past five months; however, we expect the economy to add some jobs this month especially after the upbeat ADP report showed that the private sector added 91 thousands jobs in September, which could provide indications of what the jobs report could bring today.
Moreover, the Bank of Japan also left the monetary policy unchanged today, and only extended the 1 trillion yen loan program by six months to April 2012 to support companies affected by the March 11 earthquake.
Moody's the rating agency downgraded the credit rating of twelve financial institutions in the United Kingdom due to the low chances that the British government would help these institutions over the medium to long-term in the case that they needed support. Furthermore the rating agency downgraded the credit rating of nine financial institutions in Portugal due to the high exposure to Portuguese debt holdings.
Silver fluctuated heavily today after opening the session at $31.95 per ounce, reaching a high of $32.47 and a low of $31.72, and trades now around $32.00 per ounce.
Platinum surged today after it opened in Asia at $1513.5 per ounce, and is currently trading $1525.00 after setting the highest at $1537.75 and the lowest at $1507.25 per ounce.