Gold Price Watch: Gold Price Rises on US Jobs Data
NEW YORK (Aug 22) Gold price today rose as the US dollar eased and US Treasury yields moved lower after jobless claims showed an increase. The precious metal has gained about 0.7 percent to $1,377 an ounce by 15:34 BST.
The number of US jobless claims increased by 13,000 to 336,000 last week but the four-week average fell to 330,500 a week, the lowest level since November 2007.
"Although you still have a fairly low number of claims, the market seems to be concentrating on the fact that there was still an increase last week, which is definitely the reason for gold's strength this afternoon," said Christin Tuxen, an analyst at Danske Bank, as quoted by Reuters."We are also seeing a stronger euro/dollar, so it's the dollar correlation that comes in."
Fed minutes
Yesterday, the US Federal Reserve released the long-awaited minutes of its July 30-31 meeting. Traders had been expecting that the release would provide some clarity on the US central bank’s plans about curbing stimulus measures, but the minutes showed that the Fed policy makers are still divided on the subject. Some of them believed last month that it would soon be time to scale back the programme “somewhat”, while other advised patience. The Federal Reserve currently buys $85 billion worth of debt on a monthly basis.
Concerns that the Fed might curb its quantitative easing policy - which helps support gold by maintaining pressure on interest rates while stoking fears over inflation – has been the reason for the gold price to lose nearly 20 percent this year. The price hit bottom at about $1,180 an ounce in late June after Fed Chairman Ben Bernanke said the bank expected to trim stimulus later this year and halt it by mid-2014.
Since then, bullion has recovered about $200 and traders’ sentiment towards it seems to be improving. On Tuesday, AZN increased its price target for the end of the year to $1,380 an ounce from an earlier forecast of $1,300. ANZ analysts cited the gold rebound coming earlier than they had anticipated as a reason for the lift.
According to traders, strong demand from Asian consumers of the metal, particularly China, and the recent increase in holdings of gold-backed ETF could boost the gold price.
