Gold prices are steady as we start the new trading week. In Monday's European session, the spot price stands at $1309.82 an ounce. On the release front, there is only one release on the schedule, as Federal Reserve Governor Stanley Fischer speaks at a conference in Stockholm.
Gold crossed above the $1300 level last week, climbing as high as $1322 on Friday. The precious metal has benefited as the crises in Ukraine and Iraq have worsened. The US has accused Russia of massing troops on its border with Ukraine, and tensions are high as the EU has slapped stronger sanctions on Russia, while Moscow has retaliated by banning many food imports from the West. In Iraq, Islamic State militants, who have captured large parts of Iraq, have attacked and displace thousands of ethnic Kurds, which has resulted in a growing humanitarian crisis. On Thursday, US President Barak Obama authorized air strikes against the militants in order to protect the Kurds and safeguard US interests. The situation in Iraq is volatile and could quickly destabilize even further.
As expected, the ECB maintained interest rates at 0.15% at its policy meeting last week. ECB head Mario Draghi didn't add anything dramatic in his press conference, acknowledging that the Eurozone continues to grapple with weak growth and inflation levels. Draghi said that the ECB forecasts "moderate" improvement in growth and that interest rates will remain at current levels for the near future. On the inflation front, Draghi does not expect any improvement before 2015. With interest rates already at record lows, the ECB may be forced to resort to unconventional monetary tools if the situation worsens.
US releases enjoyed a solid week, led by the IMS Non-Manufacturing PMI and Unemployment Claims. The PMI, which measures the strength of the services sector, climbed to 58.6 points, a ten-month high. Unemployment Claims dropped to 289 thousand, beating the estimate of 305 thousand. The four-week claims average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The improving labor market points to a growing economy, and the dollar has gained broad strength thanks to solid economic data.
XAU/USD 1308.64 H: 1309.21 L: 1305.21
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