Last week the Euro cost to buy Gold was + 5%

Prices for buying Gold hovered around US$1620 oz Friday morning in London, becoming marginally more volatile after release of US employment data, but failing to establish a definite direction.

Silver Prices meantime eased around lunchtime, hitting US$29.15 oz.

On currency markets the USD rallied, pushing the Euro down further, after the nonfarm payrolls release showed the US economy added 200,000 private sector non-agricultural jobs in December. The US unemployment rate fell from 8.7% in November to 8.5%.

From its high above 1.30 Tuesday, the Euro has fallen 2.5% against the USD.

By Friday lunchtime the price of buying Gold in Euros, which touched a 4-week high of €40994 per kilo (€1275 oz) looked set for a weekly gain of over 5%.

The US Dollar cost of Buying Gold was headed for a weekly gain of around 3.6%.

A close above the 200-Day moving average at 1632 is needed to shift the market for Buying Gold to Neutral from Bearish according to my charts.

While gold is pushing towards its 200-Day Moving Average at 1633 some analysts are saying that it cannot sustain a break above this mark yet.

Liquidity remains locked up as the European interbank market continues to malfunction, in the physical market, there is continuing steady buying of Gold. But the demand is more likely to provide support for Gold on dips below US$1600 rather than push it too much higher.

Friday's Asian trade saw demand for buying physical Gold according to a Shanghai trader. Liquidity is back in the market, said the trader. With the Europe outlook still grim, investors would prefer to put their dollars in some safety assets, such as Gold.

In the US the volume of Gold to held to back shares in the World's largest Gold ETF, the SPDR Gold Trust (GLD), has not changed since before Christmas.

This contrasts with the World's biggest Silver ETF, the iShares Silver Trust (SLV), saw steady outflows since the middle of last month, and the volume of Silver Bullion held fell to its lowest level since September 2010.

Silver demand is expected to slow during Y 2012, and reduced investment demand is seen alongside the current weakness in Global industrial demand.

There have been good data out of the US. But ultimately the US cannot decouple from the European crisis, there are going to be enough reasons to be worried about Global growth and the financial system in the next Quarter or 2, and Gold should benefit from that IMO. Stay tuned...

Paul A. Ebeling Jr.

Paul A. Ebeling Jr.

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.